Sustainability report 2008 - Edison Spa

SUSTAINABILITY REPORT2008

2 OUR GEOGRAPHIC PRESENCE

5 EDISON’S SUSTAINABLE DEVELOPMENT POLICY

6 WHO WE ARE

18 ECONOMIC RESPONSIBILITY

20 SHAREHOLDERS AND FINANCIAL COMMUNITY

21 ENVIRONMENTAL RESPONSIBILITY

26 EDISON AND CLIMATE CHANGE

28SOCIAL RESPONSIBILITY29 EMPLOYEES

34 CUSTOMERS

36 SUPPLIERS

37 PUBLIC INSTITUTIONS

38 COMMUNITIES

41 A NOTE ON METHODOLOGY

42 AUDITORS’ REPORT

GRI INDEX

Edison has decided to renew its Sustainability Report, focusing on the main socio-environmentalthemes (identified at page 15) and underlining the achieved results in those ambits. Other corporatecommunication tools are available on the internet portal www.edison.it, to which we specifically ask youto refer for further information , in relation to the “Guidelines for the Sustainability Report” published by the Global Reporting Initiative (GRI), which application level is B+.

SUSTAINABILITY REPORT2008

Volturino

Vaglio

Piacenza* Sermide*

Chivasso*

San Filippo del Mela*

Brindisi*

Turbigo*

Mese (12 plants)**

Udine (8 plants)**

Val Meduna (5 plants)

Tusciano (8 c.li)**

Val Caffaro (4 plants)

Naide

Calipso

Tresauro

Golfo Aranci

Porto Botte

Pieve Vergonte

Battiggio

Campo

AlbanoVenina

Armisia

Acerra

Minerbio

4 KHR plants(Edison 20%)

Rosignano

Sambuceto

Siracusa

Ripabottoni

Sella di Conza

* Edipower thermoelectric power plants

** Edipower hydroelectric power plants

Compressor station

Head offices

Thermoelectric power plants

R&D Center

Hydroelectric power plants

Wind Farms

Gas field

Oil field

Storage concession

Planned LNG terminal

LNG terminal

Gas pipelinesin planning/under construction

GALSI

Volturara-Motta

Rome

Milan

OUR GEOGRAPHIC PRESENCE

IGI

FACILITIES AND INFRASTRUCTURES AT ITALY’S SERVICE

27 thermoelectric power plants

68 hydroelectric power plants

28 wind farms

12,070 MW of installed capacity, including 2,024 MW in capacity from renewable sources*

59 concessions and exploration permits in Italy

24 concessions and permits for natural gas and crude oil exploration and production outside Italy

2 storage centers in Italy

35 billion m3 in hydrocarbon reserves

*Installed capacity data include those of Edipower at 50%

HY

DR

OC

AR

BO

NS

ELE

CTR

IC P

OW

ER

Norway

Belgium

Milan Croatia

HungaryRomania

BulgariaRome

Turkey

Iran

Egypt

GreeceAlgeria

Ivory Coast

MAIN CORPORATE OFFICES

4

5

Sustainability is a strategic element of Edison’s business model.The creation of value is based on the ability to pursue economicobjectives while at the same time steadily reducing environmentalimpacts, consistent with a sustainable development approach,thereby meeting the expectations of all stakeholders.

The world is faced with the global challenge of climate change,which can be successfully tackled only if we all get involved.As an electric utility, we have a great responsibility: we have to manage and mitigate our environmental impact and helpminimize the effects on climate, while delivering energy to all of our customers. We are convinced that the promotion of a culture of energyconservation, coupled with special services for our customers andthe development of an energy system with a low environmental

impact, can help contain global warming and provide growthopportunities in our markets.Empowering our employees and providing them with ahealthy and safe work environment are core objectives forEdison, which views them as fundamental elements to guaranteethe respect and integrity of all associates. We treasure diversityand foster the professional development of our employees bylistening to their needs and expectations.Edison is committed to strengthening its ties with its localcommunities by respecting the aspirations of the localpopulation and supporting growth in the areas where itoperates. We involve the communities in decisions that affectthem, we invest in cultural development and we promotesocial, educational and sports initiatives that benefit thecommunity.

EDISON’S SUSTAINABLE DEVELOPMENT POLICY

Edison’s Responsibility: 4 Challenges and 11 Commitments for Sustainable Development

The Environment

Help fight climate change and develop an energy systemwith a low environmental impact:� Positioning ourselves among the energy companies with the

most efficient facilities and the lowest level of greenhouse gasemissions, pursuing objectives of continuous improvement aswe shift our energy mix towards sources with lower emissions;

� Aiming to play a leadership role in the field of renewablesources in Italy;

� Operating with the utmost respect for the environment andbiodiversity.

Employees

Foster the development of our employees by providinghealthy and safe work environments:� Strengthening programs that empower our employees by

helping them develop competencies and finding an optimumwork-life balance;

� Strengthening and improving our management system foroccupational health and safety prevention and monitoring(already one of the most advanced in Europe); attainingaccident levels that are among the lowest in our industry, whilecontinuing to pursue a “zero accidents” objective.

The Market

Be a transparent and fair player in the market in which weoperate to establish respectful and lasting relationships with ourcounterparties:� Investing in research to develop new energy-saving solutions

for our customers, offering them services that are respectful ofthe environment and promoting an informed use of energy;

� Developing dialog with our customers and consumer groups toimprove the services that we offer.

Local Communities

Consolidate our ties with public institutions and our localcommunities by listening to the legitimate expectations ofour stakeholders:� Communicating our values, actions and achievements, while

listening to the expectations and changing needs of our localcommunities and those of public institutions;

� As responsible citizens, supporting social, educational andsports initiatives that benefit the community;

� Establishing and maintaining stable, transparent andcollaborative relationships with our suppliers;

� Maintaining an effective system of Corporate Governancecapable of steadily value creation for our shareholders.

Milan, February 11, 2009

Umberto QuadrinoChief Executive Officer

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WHO WE ARE

CAPITAL EXPEND. ANDEXPLORATION INVEST.

2007 489 mln euros

2008 607 mln euros

DIVIDEND PAYOUT

2007 268 mln euros

2008 268 mln euros

DIRECT ECONOMICVALUE GENERATED

2007 9,040 mln euros

200811,935 mln euros

CHARITABLE CONTRIB.AND SPONSORSHIPS

2007 2.5 mln euros

2008 3.3 mln euros

NUMBER OFEMPLOYEES (*)

2007 3,5732008 3,559

NO. OF EMPLOYEESACCIDENTS

2007 242008 19

TOT. TRAINING HOURSPER EMPLOYEE

2007 402008 41

SALES OF“GREEN ENERGY”

2007 16 GWh

2008 176 GWh

PLANTS WITH HSE MS HEALT, SAFETY & ENVIRONMENTMANAGEMENT SYSTEM

Electric Power 100 %

Hydrocarbons 79 %

ENERGY PRODUCEDFROM RENEWABLESOURCES

2007 5,572 GWh

2008 7,218 GWh

CO2 EMISSIONS AVOIDED USINGRENEWABLE SOURCES

2007 3.2 mln t

2008 4.2 mln t

SPECIFIC CO2 EMISSIONS

2007 535 g/KWh

2008 514 g/KWh

(*) Net of IWH

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Edison is one of Italy’s top energy companies, with operationsin every aspect of the electric power and natural gas industries,from procurement to production and sales of electric power andnatural gas.

The Company builds its business based on respect for theenvironment, concern for safety, delivery of high quality services,and transparency and fairness in dealings with employees,partners and the market

In 1992, Edison was the first company in Italy to adopt thecombined-cycle technology for gas-fired power plants, which isthe most efficient power generation technology and has thelowest impact on the environment. During the last 10 years, Edison completed a program ofinvestments in energy production that has no match in Europe,bringing on stream about 7,000 MW of new production capacity.

In the hydrocarbon area, Edison was the first company in Italyto develop an offshore natural gas regasification project,providing Italy with access to an infrastructure of strategicimportance for the reliability and diversification of natural gassupply sources. The Rovigo offshore regasification terminal, operational in2009, will make it possible to import 8 billion cubic meters ofnatural gas a year from Qatar.

OIL – SOURCES (000 of barrels) 2006 2007 2008

Crude oil extracted 2,168 2,628 1,729Production in Italy 2,168 2,628 1,729(1) In 2008, production of crude oil in Italy was adversely affected by the unavailability of the

Vega offshore platform.

GAS – SOURCES (millions of m3) 2006 2007 2008

Natural gas production 1,068 928 973Production in Italy 712 674 662Production outside Italy 356 254 311Pipeline imports 7,705 6,093 7,554LNG imports 62 25 -Domestic purchases and other sources(1) 4,804 6,771 5,281Total sources 13,639 13,817 13,808(1) Includes inventory changes and pipeline leaks.

ELECTRIC POWER – SOURCES (GWh)(1)

2006 2007 2008

Net production of the Edison Group 51,923 53,404 50,151Thermoelectric power plants 35,990 37,985 33,992Hydroelectric power plants 3,050 2,966 3,860Wind farms 458 510 524Edipower (2) 12,425 11,943 11,775Imports 1,471 1,174 431Other domestic purchases and swaps(3)12,006 9,195 16,871Total sources 65,400 63,773 67,453

(1) One GWh is equal to one million kWh; in terms of physical volumes.(2) Data consolidated at 50%.(3) Net of line losses.

In 2008, Edison was ranked first in Italy in the listing of the “World’s Most Admired Companies” published eachyear in the United States by Fortune magazine. In the global rankings, Edison finished second overall in the Energyindustry and sixth in the Social Responsibility listing.

This prestigious mention comes on the heels of Edison’s achievements in 2008 as the developer of such highprofile international projects as the Rovigo regasification facility, the world’s first offshore LNG terminal, and itssuccess in winning the Abu Qir concession in Egypt.

Edison, the Italian Company with the Best Reputation in the World

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Edison Energia Spa

The structure of the Edison Group is based on an integratedbusiness model that enables it to operate in all strategic areas ofthe electric power and natural gas businesses; and to achieve theCompany’s future goals.

EDISON GROUP’S CORPORATE STRUCTURE

An expanded availability of natural gas supplies will enableEdison to generate electric power with a low environmentalimpact, and to offer energy at increasingly competitive prices, inthe deregulated market for the benefit of its customers.

(1) In addition to the performance of corporate activities, Edison Spa is directly engaged in the activities of the Group’s Business Units. Specifically, itproduces electric power from hydroelectric and thermoelectric power plants and produces, imports and sells hydrocarbon products.

(2) Edipower is consolidated at 50% by the proportional method.

(*) Companies over which Edison does not have control and coordination authority.

(**) Company required to comply with unbundling requirements.

EDISON Spa (1)

Edipower Spa (2)

Joint venture (*)

Hydros Srl

Dolomiti Edison Energy Srl

Edison Stoccaggio Spa (**)

Edison D.G. Spa (**)

Electric Power Business Unit Hydrocarbons Business Unit Main companies included in the scope of consolidation

ElectricPowerManagement of thermo-electric and hydroelectricfacilities for the productionof electric power

Edison International Spa

Hydrocarbons

Hydrocarbon exploration andproduction; storage,transmission and distributionof natural gas

Gas Supply& LogisticsManagement of procurement,logistics and sales towholesalers and thermo-electric power plants

Edison Energie Speciali Spa

RenewableSourcesManagement and develop-ment of wind farms and otherfacilities for power generationfrom renewable sources

Edison Trading Spa

EnergyManagementDispatching and sales on the Power Exchange and to wholesalers

Marketing &Distribution

Sales of electric powerand natural gasto end customers

1881Giuseppe Colombofounds the Committee toPromote the Use ofElectric Power in Italy. TheCommittee will becomeSocietà Generale Italianadi Elettricità SistemaEdison in 1884.

1993The EdisonResearch Centeropens inTrofarello (TO).

1990Under the newNational Energy Plan,businesses are againallowed to build newpower plants,provided they useenvironmentallyfriendly technologies.

1963Italian electric utilitiesare nationalized.

1898The Bertini hyroelectricpower plant in Padernod’Adda begins tooperate. At that time, theplant was the mostpowerful in Europe.

Europe’s first power plantcapable of distributing acontinuous supply ofelectric power begins tooperate at Milan SantaRadegonda.

1883

Edison begins tosupply natural gasto households inMilan.

1931

Merger withMontecatini; Montedison is born.

1966

Edison introducesto Italy thecombined-cycletechnology forpower plants fueledwith natural gas.

1992

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The 2009-2014 Industrial Plan, requiring investments totaling7.2 billion euros, will provide strong momentum for thedevolvement of all of Edison’s businesses, with focus on areaswith a high growth potential. A total of 1.8 billion euros will beinvested to strengthen the Group’s main businesses:� Hydrocarbon exploration and production;� Development of natural gas procurement infrastructures;

while 5.4 billion euros will be used to develop activities in the areas of:

� International electric power generation;

� Power generation from renewable sources in Italy and abroad;� Natural gas storage capacity in Italy.

Electric Power OperationsThe guidelines of Edison's strategy include developing newgenerating capacity, mainly outside Italy; streamlining the existingfacilities; and significantly accelerating investments in renewableenergy projects.The Group will continue to streamline its CIP6 power plant portfoliowith structural enhancement activities designed to make theirderegulated-market generating capacity more flexible.Outside Italy, Edison will invest about 1.1 billion euros in new

1996The first Edison’s windfarm begins to operate.The farm is located inCasone Romano, in themunicipality ofCastelnuovo della Daunia,province of Foggia.

2008Construction of theRovigo offshoreregasificationterminal iscompleted. Thefacility is expectedto go on stream in2009.

2005Edison joins theGlobal Compact.

2002Edison Energie Speciali(wind power generation)is the first organization inItaly to receive multi-siteEMAS registration.

Edisonpublishes its firstEnvironmentalReport.

1994

Edison’s Bussi power plant is the firstfacility in Italy to receive ISO 14001environmental certification. The CET 3power plant in Taranto is the first facility inthe world to use, on an industrial scale, acombined-cycle system fueled with recycledgas from the neighboring steel mill complex.

1997

Ten years after issuing itsfirst EnvironmentalReport, Edison publishesits first SustainabilityReport and approves the231 OrganizationalModel.

2004

A 400-MW turbogas power plant fueledwith a mixture that includes “lean”natural gas from local deposits iscommissioned in Candela (FG). The steam generated by the facility is usedto heat about 150 acres of greenhousesbuilt by a local floricultural business.

2007

THE 2009-2014 PLAN

NEWINVESTMENTSIN THE ELECTRICPOWER AREA

3.60 bill euros

INVESTMENTSIN NEWGENERATINGCAPACITY

1.10 bill euros

INVESTMENTSIN RENEWABLEENERGYSOURCES

1.37 bill euros

CAPACITY FROMRENEWABLESINSTALLED IN 2014

2,900 MW

NEWINVESTMENTS IN THEHYDROCARBONAREA

3.60 bill euros

INVESTMENTSINEXPLORATION& PRODUCTION

2.40 bill euros

INVESTMENTSIN THENATURAL GASSTORAGEAREA

0.70 bill euros

NATURAL GASSTORAGECAPACITY IN 2014

2,200 mln m3

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electric power generating capacity, mainly in Greece and Turkey.In Greece, the Group will consolidate its joint venture withHellenic Petroleum, which includes T-Power’s 390-MW facilityand a 420-MW combined-cycle power plant that Edison isbuilding in Thisvi. In Turkey, the Group will focus its efforts on thethermoelectric and hydroelectric areas.

Edison is strengthenings its commitment to renewable resourcegeneration with investments that will total about 1 billion euros overthe next five years. Specifically, new projects in Italy and abroad willraise the installed capacity of the Group’s wind farms from thecurrent 304 MW to 810 MW in 2014. In the hydroelectric area, theemphasis will be on upgrading existing facilities to increase theirgenerating capacity and the production of green certificates. Lastly,a major effort will be made to develop photovoltaic systems. Overall,installed capacity based on renewable sources is expected to reach2,900 MW by 2014.

Hydrocarbons OperationsIn the hydrocarbon area, the focus will be on the development ofnatural gas infrastructures that Edison is planning and building forthe entire European market.Three major projects are scheduled for completion by 2014:� The Rovigo offshore regasification terminal, which will be operation

in 2009, making it possible to import 8 billion cubic meters of gas ayear from Qatar, 6.4 billion cubic meters of which will be available toEdison.

� The GALSI gas pipeline linking Algeria with Sardinia andTuscany, which should be completed in 2012. Under existingcontracts with Sonatrach, an Algerian company, the Group willhave access to sufficient transmission capacity to import 2billion cubic meters of natural a year from Algeria.

� The ITGI gas pipeline, which will link Italy with the Caspian Seaby way of Greece and Turkey. The Greece-Italy segment willhave a transmission capacity of 8-9 billion cubic meters ofnatural gas a year, 80% of which will be available to the Group.

In addition, Edison plans to expand its hydrocarbon explorationand production activities in North Africa and in other areas with ahigh exploration potential, with the goal of increasing both itsreserves and annual production. More than 2.4 billion euros willbe invested in these activities, including about 1.5 billion eurosearmarked for the Abu Qir concession.Lastly, in order to improve the stability of Italy’s natural gassystem, the Group will increase its natural storage capacity, whichit plans to expand to a total of 2.2 billion cubic meters (more than10% of Italy’s total capacity) by 2014, with investmentsamounting to about 700 million euros.This objective will be achieved by expanding the Goup’s two existingstorage centers and developing new concessions.

MAIN ACHIEVEMENTS OF 2008

Electric Power Operations:� Entry into the residential market and expansion in the

microbusiness segment;� Launch of a joint venture in Greece and development of

projects for the use of renewable sources;� Commissioning of the Lucito wind farm, in the Molise region;� Completion of a 3.3-MW photovoltaic pilot facility at the

Altomonte power plant;� Streamlining the portfolio of CIP6 facilities, with the sale of seven

thermoelectric power plants to Cofathec Servizi and Seci Energia.

Hydrocarbons Operations:� Completion of construction work at the Rovigo regasification

terminal, which is scheduled to go on stream in 2009;� Beginning of imports of natural gas from Algeria via pipeline;� Award to the Group of the Abu Qir concession in Egypt, which

has an annual production of about 1.5 billion cubic meters ofnatural gas and 1.5 million barrels of oil and proven reserves of70 billion cubic meters of gas equivalents, 40% of which isattributable to Edison;

� Progress in the development of the IGI (Greece-Italyinterconnection) and Galsi (Algeria-Sardinia-Tuscanyinterconnection) infrastructural projects, with completionplanned for 2012-2013.

CIP6 power plants: Facilities fueled with renewable sources and equivalent.Because of their nature these facilities can sell the electric power produced atsubsidized prices, as allowed by Resolution No. 6 issued by the InterministerialCommittee on Prices (abbreviated as CIP in Italian) in 1992.

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agree to uphold and publicize ten universal principlesthat cover human rights, labor standards,environmental protection and anti-corruption. Edison’sMission, Code of Ethics, Company Values and its newSustainable Development Policy are the key elementsthat help define the Group’s strategies and guide thedaily conduct of all of its employees.

Edison’s fundamental principles of ethics, which areset forth in the Group’s Code of Ethics, provide the foundation for its corporate culture and representthe standard of conduct that all employees arerequired to follow.Edison supports the Global Compact, an initiativelaunched by the United Nations by which companies

OUR RESPONSIBILITY

ETHICS IN BUSINESS CONDUCT AND CORPORATE ACTIVITIES

Lawfulness Integrity

Confidentiality Commitmentto improvement

Pro

fess

iona

lde

velo

pmen

t Absence ofconflicts

of interests

Equalopportunities

Occupationalsafety and health

Respect for the dignity of individuals

Loya

lty

Transparency

COMMITMENT TOSUSTAINABLE DEVELOPMENT

AND RESPONSIBLE BEHAVIORTOWARD THE PUBLIC

Promotion ofsustainable development

Responsible behaviortoward the public

ETHICS IN EMPLOYMENT AND PROTECTIONAND EMPOWERMENT OF ASSOCIATES

EDISON’S MISSION IS TO SUPPLY ITS CUSTOMERS WITH HIGHQUALITY ENERGY AND SERVICES, WORKING IN PARTNERSHIPWITH ITS SUPPLIERS TO DEVELOP AND DEPLOY MORE EFFICIENTTECHNOLOGIES THAT ARE COMPATIBLE WITH THE ENVIRONMENTAND INCREASE SAFETY.

INTEGRITY

RESPECT

INNOVATION

SPEED

EXCELLENCE

Edison’svalues, which

are rooted in itsCode of Ethics, guideus in the way we do

business and interact with

others.

SERVICE

TEAMSPIRIT

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CORPORATE GOVERNANCE

Edison’s system of Corporate Governance is the set of standardsand behavior guidelines deployed by the Company to ensure thatits governance bodies and control systems are functioningefficiently and transparently.In developing its governance structure, Edison adopted the principlesand implementation criteria recommended by the CorporateGovernance Code promoted by Borsa Italiana (2006 version). This structure includes the following governance bodies:� Shareholders’ Meeting;� Board of Directors; � Board of Statutory Auditors;� Independent Auditors.

Edison’s governance structure also includes its system of internal controls, its Code of Ethics and its system to powersand proxies.

The Corporate Governance system adopted by Edison definesand regulates a series of activities reserved for the Board of Directors, such as transactions with related parties,determination of Directors’ compensation and assessment of their performance, and provides procedures to prevent the occurrence of conflicts of interests.More information is provided in the “Corporate Governance –Report on Corporate Governance and on the Company’sOwnership Structure” available on the company website(www.edison.it).

In the performance of its tasks, the Board of Directors is assistedby the following three consulting committees:� Strategy Committee;� Compensation Committee;� Audit Committee.

CORPORATE GOVERNANCE 2006 2007 2008

Total number of BoD members 12 12 13Number of executive Directors on the Board of Directors 2 2 1

Number of independent Directors on the BoD 2 2 3

Number of women on the BoD - - -

Number of BoD meetings 8 9 8

Average percentage attendance of BoD meetings by Directors 92.7 92.6 97.1

Average percentage attendance of BoD meetings by Statutory Auditors 87.5 85.2 83.3

Number of meetings by the Audit Committee 5 5 6

Number of meetings by the Compensation Committee 4 5 4

Number of meetings by the Strategy Committee 5 5 4

Number of meetings by the Board of Statutory Auditors 6 8 11(1) The Chairman does not perform any function requiring executive authority.

SHAREHOLDERS’ MEETING

Approves the financial statements, elects the Board of Directors and the Board of Statutory Auditors, appoints the Independent Auditors and approves amendments to the Bylaws

STRATEGY COMMITTEE

Develops, evaluates and recommends to the Board of Directorsstrategic options forEdison and the Group

COMPENSATIONCOMMITTEE

Makes recommendationsabout the compensation ofDirectors with specialassignments and aboutincentive and compensationplans for top management

AUDITCOMMITTEE

Helps the Board ofDirectors assess theeffectiveness of thesystem of internal controls,the accounting principlesand the audit plan MANAGEMENT ENTITIES

CONTROL ENTITIES

BOARD OFDIRECTORS

OVERSIGHT BOARD

Ensures that the “231Model” is functioningeffectively and is regularly updated

BOARD OF STATUTORY AUDITORS

Ensures compliance withlaws and the Bylaws andmonitors the Company’soperations

INDEPENDENTAUDITORS

Audit the Company’sfinancial statements andperform regular reviews ofits accounting records

Defines the Company’soverall strategy and isresponsible for overseeing itsmanagement

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System of Internal ControlsEdison’s system of internal controls is a structured and organic setof rules and procedures and organizational structures designed to prevent or minimize the impact of unexpected results and allowthe Company to achieve its strategic, operating, statutory and regulatory compliance, and fair and transparent internal and market disclosure objectives.

Operations audits covered all of the Company’s businesses,including issues with a social and environmental impact.Work carried out in this area in 2008 included six major auditengagements that concerned mainly occupational safety, CO2

management strategies and projects for the development of renewable source facilities, wind farms in particular. In 2009,the Company plans to perform an equal number of audits focusedmainly on customer relations and continuing the monitoring of renewable source projects.In addition, most audit engagements will include specific modulesto assess compliance with the Code of Ethics.In 2008, training concerning topics covered by Legislative DecreeNo. 231/01 and concerning fraud prevention was provided to 51 employees with important positions in areas with exposureto such issues.

MANAGEMENT TOOLSFOR THE PREVENTION OF CRIMES

Sustainability GovernanceEdison has adopted the tools needed for an effective andefficient governance of its corporate social responsibility, with thegoal of managing the Company consistent with a sustainabledevelopment approach and with the goal of creating value notjust for its shareholders but for all of its stakeholders.Early in 2009, the Company adopted a Sustainable DevelopmentPolicy, which provides a more comprehensive and systematiccoverage of sustainability issues formerly addressed in part by theEnvironment, Safety and Quality Policy and the Code of Ethics.

Management Systems and Audit ProcessTraditionally, management systems provided Edison with a keytool to monitor and manage environmental, safety and qualityissues affecting its operations. The Company’s electric poweroperations were the first businesses in Italy to receive ISO 14001and EMAS environmental certification. Currently, 100% of the electric power operations’ locations1 arecovered by environmental and safety management systems andcertification of the three hydrocarbon locations that still lackcoverage has already been planned.The objectives achieved in 2008 include the following:� Verification of the quality management system (ISO 9001) of the

Marketing and Distribution Business Unit;� Full coverage of the environmental (ISO 14001) and safety

(OHSAS 18001) certification by Edison Distribuzione Gas;� Launch of a project to implement a Health, Safety &

Environmental (HSE) integrated management system at Italianlocations and foreign branches of the hydrocarbons operations,in accordance with the HSE guidelines adopted in 2008.

Edison believes that the auditing process plays a key role in thecontinuous improvement of its performance and managementpractices. As a result of the maturity achieved by themanagement systems adopted by the Group and their steadydevelopment from single-site to system-wide application, theCompany also adopted methodologies increasingly planned onthe basis of the level of risk. Consequently, the number of auditsdecreased, but the review level became deeper.

Risk ManagementEdison uses a centralized corporate function to control the risks thatarise in connection with the pursuit of its different business activities. This function’s purpose is to maximize the efficiency and effectiveness ofthe risk mitigation actions implemented by the Company, while providinga significant tool to exploit the full range of development opportunities.The Group’s system to control and manage corporate risksaddresses two main areas: Enterprise Risk Management, which is designed to identify, monitor and control risks in accordance withthe integrated management system model adopted by the Group,and Energy Risk Management. The latter is designed to manage the commodity market risk, which is the risk entailed by changes in the prices of energy raw materials in the financial and physicalmarkets in which the Company operates.

HSE AUDIT PROCESS 2006 2007 2008

Internal audits 173 167 119

External (third-party) audits 34 25 19

Total number of audits 207 192 138

1. Insofar as Edipower is concerned, 100% coverage applies only to environmental certification inaccordance with the UNI EN ISO 14001 standard.

In 2004, in order to prevent the occurrence of unlawfulconduct by Group employees in the performance of activities related to the Company’s business, Edison adopted an Organizational Model compliant with Legislative Decree No. 231/2001. According to the decree companies can be held liable mainly for crimes against the public administration (corruption,extortion, etc.), corporate crimes (e.g., false corporatecommunications) and market abuse. The Model adoptedby the Group is a set of general principles, rules ofconduct, control tools, organizational procedures, trainingand information activities and disciplinary rules designed to prevent the occurrence of the crimes covered by the above mentioned Decree. The Board of Directorsappointed an Oversight Board for the specific purpose of monitoring the Model’s effective implementation.By a resolution adopted on December 5, 2008, the Model was updated to cover new crimes added to the “231 system”(crimes against individuals, transnational crimes, receivingstolen property and money laundering) and take into accountchanges in Edison’s business activities. This updating processis currently being implemented by the main Group subsidiaries.The operation audits carried out in 2008 included 10 engagements specifically focused on these issues.

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Enterprise Risk ManagementEdison has developed an integrated risk model based on theEnterprise Risk Management (ERM) international principles.ERM’s main purpose is to adopt a systematic approach to theprocess of mapping the Company’s most significant risks, assessin advance their potential negative effects and take appropriatemitigating actions.

For this purpose, Edison adopted a Corporate Risk Model thatcovers all types of risks inherent in the Group’s businesses andapplies a risk scoring method that assigns a relevance index toeach risk, based on an assessment of its overall impact,probability of occurrence and level of control.The table to the right provides an overview of the risk modeladopted by Edison.

Examples of risks related to the external environment includeregulatory issues, macroeconomic factors, the impact of changes inpublic opinion and social views, climate and weather conditions andthe effect of fluctuations in prices and rates. In addition to the risksinherent in the Group’s core businesses, process risks include suchrisks as those related to ethics, social responsibility andenvironmental issues, human resource management and litigation.Examples of strategy risks include all risks related to the Group’sbusiness model, to the process of making strategic decisions, tocorporate governance tools and to performance monitoring.

Lastly, a significance and priority analysis is applied to themapped risks to define the appropriate mitigation plans,consistent with an integrated risk management approach.

Type Risk Examplesof risk area

Institutions Reputational risks, regulatory risks, risks and society of conflicts with local communities, etc.

Market Risks related to market prices, etc.

Weather events and Risks of business interruption,natural disasters unavailability of materials, etc.

Interdepartmental Ethics, sustainable development, etc.

Core businesses Failure to achieve objectives, etc.

Human resources Risks related to occupational safety,losing qualified personnel, etc.

Finance Credit rating and financial credibility,liquidity, etc.

Other support Information systems, etc.processes

Strategy Business model, etc.

Management of Performance monitoring, etc.return on investment

Risks relatedto theexternalenvironment

Processrisks

Strategy andplanningrisks

ENTERPRISE RISK MANAGEMENT

Aggregation of risks of operating units

Mapping ofGroup risks

Risk level = overall impact x probability of occurrence

Prioritizingactions

EDISON Spa

risk

leve

ls–

+

control level –+

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A process that included interviewing management, assessingthe input of stakeholders and analyzing the main sustainabilityissues that appear to be relevant to the energy industry, asdiscussed in the main national and international media, wasused to identify social responsibility issues that are relevant toEdison, which could then be analyzed for the purpose ofdeveloping future action plans.The approach used is based on a broader concept ofsignificance, which defines the relevance of informationrelative to the impact of the Group’s activities on economic,environmental and social issues.

IDENTIFICATION OF RELEVANT CSR ISSUESThe issues that were deemed to be relevant and,consequently discussed in this Report, were identified throughthe use of a matrix that included such variables as Edison’ssignificant economic, environmental and social impacts andthe effects that these impacts have on the perceptions anddecisions of its stakeholders.The analysis was based on a scale with three levels ofassessment: low, medium and high.The analysis performed this year should be viewed as an initialexercise that will be expanded and improved as part of theongoing dialog with the Group’s stakeholders.

Low

Med

ium

Hig

h

Impa

ct o

n st

akeh

olde

rs

Low Medium High

Significant economic, social and environmental impactsof the Edison Group

RELEVANT ISSUES BY STAKEHOLDER

Environment� Climate change� Development of

renewable sources� Protection of

biodiversity

Local communities� Support of communities� Dialog with local communities

Customers� Green products� Fair contracts� Transparent

communications� Customer satisfaction

Employees� Health and safety� Training� Equal opportunities� Competencies

Shareholders� Business integrity� Economic performance

Suppliers� Supply chain

monitoring� Partnership and

fair dealing

16

Listening and Dialoging with OurStakeholdersConsistent with Edward Freeman’s classic definition, Edisonidentifies as its stakeholders “all individuals and cleary identifiablegroups that are instrumental to the Company’s survival:shareholders, employees, customers, suppliers and publicinstitutions. In a broader sense, a stakeholder is any clearlyidentifiable individual who can affect or be affected by the activityof an organization in terms of its products, policies and workprocesses.” As part of its responsible management path, Edisoninteracts with and involves all its counterparties (see diagram ofthe main stakeholders) both internally (employees andshareholders) and externally (customers, suppliers, financialcommunity, public administration, competitors, community and theenvironment) and undertakes specific commitments toward eachone of them. The analysis of the level of impact of Edison’sactivities was used to develop a map that lists the main categoriesof stakeholders with whom Edison interacts.Dialoging with the various parties that for different reasonsinteract with Edison is an ongoing practice that occurs daily withdifferent modalities. The publication of the Sustainability Reportprovides each year an important opportunity to communicate

with the different categories of stakeholders and provides anoverview of the main activities carried out as part of the dialogand involvement process. These activities are the embodiment ofa commitment to learn the stakeholders’ opinions and conductan open, ongoing and constructive dialog with them.

In 2008, Edison continued to broaden its efforts to dialog with itsstakeholders. In October, representatives of the main stakeholdercategories (local authorities, financial community, NGOs, universitiesand the media) were brought together in a focus group to expresstheir needs and expectations. The purpose of this event was todiscuss the strengths and weaknesses of the Sustainability Report,so that it could be steadily improved and made increasinglyresponsive to the expectations of its intended users.An important issue raised was the request for greater disclosure ofthe strategies that underlie the Group’s decisions and of theprogress made toward achieving corporate objectives. Issuesbrought up in the sustainability area included impact on climatechange, development of sustainable products and services, socialand environmental impacts on communities and communication ofthe activities carried out by the Group locally. This project is part of abroader and structured program of activities that Edison carries outas part of the dialog and involvement process.

Stakeholder Stakeholder engagementcategory activities

Employees Meetings with employees and engagement activities(Sustainable Development Trophy, Edison per te)

Customers Customer satisfaction surveys and focus groups with consumer associations

Shareholders Meetings with the financial community(investors and analysts)

Communities and Annual survey performed by Eurisko, discussionEnvironmental panels and focus groupsOrganizations

Public Discussion panels, direct interaction with public entities,Administration focus groupsEm

ploy

ees

CustomersS

hareholdersLa

borU

nion

s

SuppliersLocalC

omm

unitiesEnv

ironm

enta

lOrg

.

Public AdministrationInstitutions

Futu

reG

ener

atio

ns

MediaN

GO

17

The survey carried out by Eurisko to assess how Edison’s activitiesare perceived by the stakeholders outside the Group continued in2008, with the objective of monitoring the quality of the relationsbetween Edison and its key counterparties. In addition, the Groupcarried out a study focused on the communities that reside inareas near the Group’s facilities (City of Bolzano, the Adda Riverbasin, the Daunian Apennines, and the towns of Simeri-Crichi,Marghera, Rovigo and Otranto) to analyze the Company’sreputational profile and assess the impact of its activities on itslocal communities.The survey showed that Edison is viewed favorably and providedimportant indications about the social and environmental issuesthat local communities view as priorities.

Social responsibility issues that were perceived as prioritiesincluded the health and safety of the population. In the area ofcommunications, the survey showed a desire for greater focus onproviding transparent and clear information.Lastly, the presence of the Group’s activities within the localcommunity was perceived favorably, particularly in terms of theirimpact on economic activity and new job creation.However, some potentially negative issues for the communitieswere also raised, particularly with regard to the potential effectsof the Group’s activities on the environment and the health of thepopulation.In view of these findings, Edison will redouble its efforts tostrengthen its relationships with its local communities.

WHICH ARE THE PRIORITIES OF EDISON’SSTAKEHOLDERS? (*)(**)

HOW SUCCESSFUL WAS THE GROUP IN LOCATING ITSFACILITIES WITHIN THE LOCAL ENVIRONMENT? (*)(**)

(*) Source: Eurisko data.

(**) The data were processed using a weighing method that takes into account the relative

weight of population at each location.

(*) Source: Eurisko data.

(**) The data were processed using a weighing method that takes into account the relative

weight of population at each location.

0 5 10 15 20 25

Protect/Respect the local environment withinwhich a plant/office is/will be located

Increase the Group’s commitmentto/involvement in social and cultural projects

Health protection

Personal safety

Social responsibility

Communication activities

Provide transparent and clearinformation about the Group’s activities

Communicate locally

Cooperate/Interact with the localcommunities

Reassure the local population thatthe Group’s facilities are safe

Deal with the local communities in a transparent and clear way 1

1

1

2

5

8

9

17

0 10 20 30 40

Fairly successful

So so

Not very

Not at all

No answer

Very successful

5

14

20

9

32

15

10

10

24

18

ECONOMICRESPONSIBILITY

EBITDA



EBIT

2007 896 mln euros

2008 861 mln euros

SALES REVENUES


200811,066 mln euros

GROUP INTERESTIN NET PROFIT

2007 497 mln euros

2008 346 mln euros

NET BORROWINGS



DEBT/EQUITY RATIO

2007 0.332008 0.36

19

DIRECT ECONOMIC VALUE DISTRIBUTED

� Operating expenses, which totaled 9,818 million euros,includes “raw materials and services used” but does notinclude “additions to provisions,” “writedowns of receivables,”“indirect taxes” and “charitable contributions and sponsorships.”Consequently, it reflects the impact of measuring at fair valueoutstanding physical contracts and derivative commodity andcommodity-based currency contracts.

� Remuneration of employees, which is the same as “labor costs”in the financial statements, amounted to 223 million euros.

� Remuneration of lenders and shareholders, which totaled553 million euros, includes the dividends distributed toshareholders and, for lenders, “financial expense,” “currencytranslation losses” and “expense on equity investments.”Consequently, it reflects the impact of measuring at fair valueoutstanding derivative contracts that hedge the effect ofchanges in interest rates and currency translation rates.

� Remuneration of the Public Administration, which includes“current taxes” and “indirect taxes,” amounted to 338 million euros.

� Charitable contributions and sponsorships, which includes2,820,000 euros in sponsorships and 442,000 euros incharitable contributions.

� The 2008 breakdown includes economic value fromdiscontinued operations of 4 million euros, whichcorresponds to “net result from discontinued operations” in theconsolidated financial statements of the Group.

The incremental wealth that Edison creates through its industrialactivities is computed by determining the economic value that itgenerates and how it is distributed among its main stakeholders.Starting with this Report, Edison computes the economic value it generates and distributes in accordance with the methodprovided in the Sustainability Reporting Guidelines developed by the Global Reporting Initiative (GRI) in 2006 (G-3).In 2008, the total economic value generated by the Groupamounted to 11,935 million euros. Edison retained 8.35% of thisamount and distributed the remaining 91.65% to its stakeholders.More specifically:� Revenues, which totaled 11,750 million euros, include “sale

and service revenues” and “other revenues and income” and,therefore, reflect the impact of measuring at fair valueoutstanding physical contracts and derivative commodity andcommodity-based currency contracts.

� Financial income includes “financial income,” “currencytranslation gains” and “income from equity investments”,consequently, it includes the impact of measuring at fair valueoutstanding derivative contracts that hedge the effect ofchanges in interest rates and currency translation rates, whichamounted to 185 million euros.

A breakdown of the economic value distributed to stakeholdersincludes the following items:

DIRECT ECONOMIC VALUE GENERATED ANDDISTRIBUTED BY EDISON (in millions of euros)

2007 2008

Economic value generated by the Group 9,040 11,935Revenues 8,859 11,750Financial income 181 185

Economic value distributed by the Group 8,158 10,939Operating expenses 6,957 9,818Remuneration of employees 219 223Remuneration of lenders and shareholders 664 553Remuneration of the public administration 316 338Charitable contributions and sponsorships 2 3Economic value from discontinued operations - 4

Economic value retained by the Group 882 996Depreciation and amortization 709 782Additions to provisions and reserves 173 214

82.26%

1.87% Operating expenses

Remuneration of employees

Remuneration of lenders andshareholders

Remuneration of the publicadministration

Economic valuefrom discontinuedoperations

Charitablecontributions

Economic valueretained by the Group

4.63%

2.83%

0.03%

0.03%

8.35%

20

SHAREHOLDERS AND LENDERS

In the course of conducting its business, Edison engages in anongoing dialog with its shareholders, with the goal of fullycomplying with the relevant laws and regulations andsafeguarding their right to receive the accurate and timelyinformation they need to make informed investment choices.Specifically, Edison is committed to putting the interests of theCompany and of the community of its shareholders ahead of thespecial interests of individual shareholders or shareholder groups.The chart provided above shows a breakdown of Edison’sshareholder base at April 2, 2008.

Transparency and Timeliness ofFinancial CommunicationsEdison makes available relevant information about any action ordecision that could have a material impact on the investments ofits shareholders by publishing it on its website (www.edison.it)and through a dedicated e-mail address and toll-free number.Moreover, Edison makes available to its shareholders the documentsprepared for the Shareholders’ Meeting and ensures that itsDirectors routinely attend Shareholders’ Meetings, respecting theright of each shareholder to ask questions about different items onthe Meeting’s agenda and express his or her opinion.On the occasion of the announcement of its annual, semiannualand quarterly results, the Company organizes special conferencecalls (five in 2008) with institutional investors and financialanalysts that are also open to the financial press.

A2A Spa ENIA Spa SEL Spa DOLOMITIENERGIA Spa

DELMI

TRANSALPINA DI ENERGIA

EDISON

MARKETINVESTORS

WGRM

FINANCIALINVESTORS EDF

15%51% 10% 10% 14% 100%

50%

19.4%61.3%

9.3%

10.0%

50%

EDISON’S SHAREHOLDERS

RATING 2007 2008

Standard & Poor’sMedium/Long-term rating BBB+ BBB+

Short-term rating A-2 A-2

Medium/Long-term outlook Positive Stable

Moody’sMedium/Long-term rating Baa2 Baa2

Medium/Long-term outlook Stable Stable

Edison is committed to providing the market with informationthat makes it increasingly simple to assess the Company’soperating and financial performance and its growth outlook.Activities in this area are designed to maintain an ongoingdialog both with buy-side counterparties — one-on-onemeetings, roadshows and conference calls — and sell-sidecounterparties — meetings with financial analysts to discusscorporate strategies — and include the daily availability of theInvestor Relations team.Lastly, Edison is in constant contact with the main rating agenciesthrough conference calls and special meetings, such as theManagement Review, an annual event where the rating agenciesare provided with access to the Group’s top management as partof their effort to monitor the Company’s performance on anongoing basis.At the end of 2008, Moody’s expressed a positive opinion aboutthe Abu Qir transaction and the feasibility of the 2009-2014Industrial Plan, confirming Edison’s 2007 rating.

GruppoTassara Spa

21

ENVIRONMENTALRESPONSIBILITY

ENERGY USED 2006 2007 2008

Natural gas millions of Sm3 9,688 10,484 9,302Coke-oven gas millions of Nm3 505 558 594Blast-furnace gas millions of Nm3 8,748 9,213 8,763Steel-mill gas millions of Nm3 344 71 68Fuel oil thousands of t 1,550 1,419 1,226Gasoil thousands of t 7 8 8Coal thousands of t 1,376 1,481 1,428Tree bark thousands of t 50 44 55Mud thousands of t 27 24 21Energy usage data are those for the electric power operations and the hydrocarbons operations.

MATERIALS USED

Process chemicals t 64,575 53,554 38,174Dielectric lubricant and coolant oils t 472 385 485

WATER RESOURCES USED

Sea water thousands of m3 3,233,382 3,432,406 3,802,585Water from rivers and canals thousands of m3 1,912,626 1,909,878 1,825,718Water drawn from the aquifer thousands of m3 19,780 6,238 5,419Industrial water thousands of m3 8,370 9,646 7,703Other water resources used thousands of m3 5,386 5,599 3,878Total water resources thousands of m3 5,179,544 5,363,766 5,645,303

EMISSIONS INTO THE ATMOSPHERE

SOx t 20,355 19,002 13,767NOx t 22,191 20,106 16,036Particulate matter t 701 730 512CO t 2,804 2,934 2,175CO2 t 37,635,892 37,252,344 33,584,459The emissions data are those for the electric power operations and the hydrocarbons operations. The CO2 amounts include equivalent emissions for natural gas leaks.

WASTE GENERATED

Special non-hazardous waste t 155,253 159,231 143,179Special hazardous waste t 9,324 5,481 8,537Total waste generated t 164,576 164,711 151,716Recycled waste t 106,518 101,455 97,823Includes waste from regular operations and from one-time projects.

INSPECTION TO LOCATE NATURAL GAS LEAKS

Pipelines inspected Km 1,686 1,924 2,000Total pipelines Km 3,221 3,363 3,404Total number of leaks located 2,050 1,902 1,056Total volume of leaks thousands of m3 1,179 1,684 999

21

22

In the environmental area, Edison has chosen to go beyond merecompliance with current regulations, adopting a virtuousenvironmental management model that can help it achieve acontinuous improvement of its performance.This goal is pursued by:� Decreasing the Company’s environmental impact with tools

that include promoting the use of renewable sources;� Adopting certified environmental management systems;� Increasing management’s awareness and providing continuous

training to employes;� Cooperating with public institutions and with the regulatory and

control authorities;� Maintaining a dialog about environmental issues with the

community and all other stakeholders;� Using the best technologies available;� Using prequalified suppliers on environmental issuers.

Significant Environmental IssuesThe use of natural resources, emissions into the atmosphere andwaste generation are the most significant environmental issuesfaced by Edison’s activities. In 2008, the Company opened andmanaged 26 construction sites in Italy, where it built newproduction facilities and infrastructures, carried out environmentalremediation projects and revamped/repowered power plants with the support of numerous contractors working alongsideGroup employees. The main environmental issues at constructionsites are noise pollution and the production of solid waste,generated mainly by excavation work carried out for sitepreparation purposes.

ELE

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IND

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OP

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SRESOURCES

USED

� Water� Raw materials (fuel)� Consumables

(chemicals)

� Emissions into the atmosphere� Effluents� Solid waste� Noise

� Use of natural gas and ofcombined-cycle cogeneration

� Use of DLN (Dry Low NOxemission) technology

� Integrated environmental andsafety management systems

� Water� Raw materials (dielectric oil)� Fuel for auxiliary services

� Effluents� Solid waste� Noise� Biodiversity

� Minimum vital downstream waterflow

� Installation of noise reductionequipment and sound proofing

� Construction of fish ladders

SIGNIFICANTENVIRONMEN-TAL IMPACTS

MITIGATINGACTIONS

TAKEN

RESOURCESUSED


MITIGATINGACTIONS

TAKEN

� Chemicals (dielectric oil andlubricants)

� Noise� Electromagnetic fields� Visual impact� Solid waste� Biodiversity (impact on birds)

� Use of low-noise wind turbines� Installation of transformer stations

inside the wind turbine towers

� Water� Raw materials (fuel)� Chemicals� Electric power

� Impact on soil and subsoil� Noise� Waste

� Actions to secure the aquifer� Restoration of areas disrupted by

the laying of the pipeline� Use of sound proofing panels� Use of scheduled maintenance

(wire-line)

� Chemicals

� Gas leaks released into theatmosphere

� Continuos network monitoring� Periodic monitoring of damaged

pipes

RESOURCESUSED


MITIGATINGACTIONS

TAKEN

RESOURCESUSED


MITIGATINGACTIONS

TAKEN

RESOURCESUSED


MITIGATINGACTIONS

TAKEN

The Candela (FG) power plant, a high-performance facilitywith a reduced environmental impact that uses “lean” gasavailable locally reached full capacity in 2008. The technology used includes a 400-MW high-efficiency(75% counting heat recovery) and low-emissions turbogassystem with CO2 emissions that are 50% less than those of conventional systems. In addition to generating electricpower, by exploiting its heat recovery system, the powerplant uses steam to heat about 150 acres of greenhousesfor the cultivation of roses, avoiding 185,000 tons in annualCO2 emissions. This project, which Edison pursued aggressively and wassupported by local public administrations, not only uses local resources with a minimum environmental impact, but also represents an example of how public-privatecooperation can be used to overcome the Not-in-My-Backyard (NIMBY) syndrome and create growthopportunities for local economies.

CANDELA: HIGH EFFICIENCY,REDUCED EMISSIONS AND USEOF LOCALLY AVAILABLE LEAN GAS

23

Extraordinary Environmental EventsThe only extraordinary environmental event that occurred in 2008affected Edison Distribuzione Gas. During the removal of twounderground tanks that were no longer in use, the soils showedsigns of hydrocarbon contamination caused several years earlierby activities that predated Edison’s presence at this location andwas not caused by an accident. The Company immediately filedthe report required by Article 242 of Legislative Decree No.152/06 and took emergency action to secure the site byexcavating the contaminated area and testing the sides andbottom of the excavated area. After removing the contaminatedsoil, which, as required, were disposed of as hazardous waste,new tests were performed, which showed that the actions takenhad been successful.

A Commitment to BiodiversityIn 2008, consistent with its awareness of the importance ofprotecting and valuing biodiversity, Edison continued thecollaborative relationship that it established in 2006 with theAbruzzo, Latium and Molise National Park for the protection ofthe Marsican bear and its habitat. The radio collars purchasedwith Edison’s support are now being used to track the distributionof these mammals within the park and to analyze and activelymanage critical information about its presence. In addition, theUniversity of Rome cooperated in the production of aneducational monograph about the Marsican bear designed toprovide new information about this animal and increaseawareness about its importance among the public in general andthe local communities in particular.

Dielectric,cooling andlubrication oils

Processchemicals

MATERIALS USED (in tons)

70,000

65,000

60,000

55,000

50,000

45,000

40,000

35,000

30,0002006 2007 2008

472

64,575

385

53,554485

38,174

Specialhazardous waste

Special non-hazardouswaste

WASTE GENERATED (in thousands of m3)

180

160

140

120

100

80

60

40

20

02006 2007 2008

Coal

Fuel oil

Steel-mill gases

Natural gas

ENERGY CONSUMPTION (in thousands of TEP)

14,000

12,000

10,000

8,000

6,000

4,000

2,000

02006 2007 2008

11,20811,825

10,611

Other waterresources

Water fromrivers andcanals

Sea water

USE OF WATER RESORUCES (in millions of m3)

6,000

5,000

4,000

3,000

2,000

1,000

0,02006 2007 2008

5,180 5,3645,645

EFFLUENTS GENERATED (in millions of m3)

6,000

5,000

4,000

3,000

2,000

1,000

02006 2007 2008

5,140.35,337.4

5,621.5

9.3

155.3

5.5

159.2

8.5

143.2

NATURAL GAS LEAKS (in thousands of m3)

2006 2007 2008

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

1,179

1,648

990

24

Remediation of Industrial SitesIn 2008, projects involving the characterization, remediation andsecuring of 10 industrial sites continued at the following locations:the Levante and Azotati power plants in Porto Marghera (VE); theTorviscosa (UD), Sesto San Giovanni (MI), Piombino (LI), Bussi sulTirino (PE), Taranto and Milazzo (ME) power plants and the Sinigo(BZ) and San Giuseppe di Cairo (SV) electrical stations. Most ofthese sites are within high profile industrial areas, potentiallypolluted by activities carried out in previous years and designatedas areas of “national interest” pursuant to law. Edison’s commitmentto the remediation of its properties is demonstrated by its ongoingeffort to identify the best technologies offered by the market for theenvironmental remediation of the affected sites.

Emissions into the AtmosphereThe downward trend in emission levels continued in 2008 for allpollutants generated by the Group. This positive performance isthe combined result of a decrease in gross production of electricpower compared with 2007, with an attendant reduction in theuse of fossil fuels, and of a change in the mix of Edison’s portfolioof thermoelectric power plants that resulted from the disposal offacilities using less efficient technologies. Specifically, directemissions of CO2, which are one of the main culprits of thegreenhouse effect, continued to trend down compared withprevious years. This year’s data were again significantly affectedby the performance of the Taranto and Piombino power plants,which use exhaust steel-mill gases to produce energy.This choice of generating system, while it increases the Group’sspecific emissions, also delivers significant energy savingsbecause, otherwise, the steel-mill gases that Edison uses would bereleased directly into the atmosphere.CO2 emissions avoided through the use of renewable sources(hydroelectric and wind power mainly) rose to 4,169,039 tons in2008, or about 30% more than in 2007.

Environmental AccountingThe environmental expenses incurred by Edison have been risingsteadily over the past three years, reaching 80 million euros in

Sm3: Standard m3, a volume of gas at 15.0° C and 1.01 of absolute bars ofpressure.

Nm3: Normal m3, a volume of gas at 0° C and 1.01 of absolute bars of pressure.SOx: Sulfur oxides, gases produced by the combustion of fossil fuels

containing sulfur.NOx: Nitrogen oxides (primarily NO and NO2), gases produced by the

combustion of fossil fuels.Partic-ulates: All solid microscopic particles generated by the combustion process that

are dissipated into the atmosphere.CO: Carbon monoxide, toxic gas coming from incomplete combustion of the

carbon present in fossil fuels.CO2: Carbon dioxide, a natural gas component of the atmosphere and a gas

produced by the combustion of fossil fuels.

RECYCLED WASTE (as a % of the total)

2006 2007 2008

100

80

60

40

20

0

64.761.6

64.5

MINIMUM VITAL DOWNSTREAM WATER FLOW (mln m3)

(Edison data)

1,000

800

600

400

200

02006 2007 2008

852.3920.5 911.7

25

2008. Expense items included in environmental accounting areonly those used for projects devoted to protecting theenvironment. They do not include those used for projects that,while beneficial for the environment, are designed primarily toaddress other needs, such as increasing the efficiency ofproduction facilities (e.g., converting power plants to combined-cycle technology) or reducing the use of natural resources (e.g.,building new power generation facilities that use renewablesources). Excluded expenses also include fees paid for licensesto draw and divert water. The main capital investments carried outin 2008 included the installation of systems to reduce SOx(Desox) and NOx (Denox) emissions at two 160-MW units of theSan Filippo del Mela power plant (Edipower), at a cost of about45 million euros, and the decommissioning of a coal fired powerplant operated by Caffaro at the Torviscosa site, for a total cost of4 million euros.

To live in an environmentally sustainable way also meansrespecting the environment when we travel. In Italy,automobile traffic is responsible for releasing each yearinto the atmosphere about 70 billion kg of CO2 and othersubstances harmful to health and the environment. By choosing to use mass transit, every one of us canmake an important contribution to protecting our planet.Accordingly, Edison renewed for another year a specialagreement with Atm Milano and Ferrovie Nord Milanothat will anable its employees to obtain yearly passes forthese mass transit systems.

MORE USE OF MASS TRANSIT,MORE RESPECT FOR THE PLANET

g/kWh thermo equiv. g/kWh total equiv.

NOX TREND

0.350

0.280

0.210

0.140

0.070

02006 2007 2008

0.347

0.319

0.313

0.288

0.275

0.245


SOX TREND

0.320

0.240

0.160

0.080

0

0.235

0.209


CO2 TREND

600.000

500.000

400.000

300.000

200.000

100.000

0.000

581.980

535.294

577.509

513.679

AVOIDED CO2 EMISSIONS (t CO2)

5,000

4,000

3,000

2,000

1,000

0

4,169,039

2006 2007 2008

2006 2007 2008 2006 2007 2008

3,243,374

Investments Operating expenses

90.080.070.060.050.040.030.020.010.0

02006 2007 2008

ENVIRONMENTAL EXPENSES ANDINVESTMENTS (in millions of euros)

63%

1%5%

Air and climate protectionWater managementWaste treatmentSoil, subsoil and aquifer protectionNature and landscapeprotection andremediation projectsOther environmentalprotection activitiesReduction of noise,vibrations and electro-magnetic fields

6%

11%

9%

5%

35.8

44.9

82.4

0.265

0.289

0.286

0.311

542.631

590.596

3,321,513

BREAKDOWN OF ENVIRONMENTALEXPENSES AND INVESTMENTS IN 2008

EDISON AND CLIMATE CHANGE

NUMBER OF CDM/JIPROJECTS

2007 22008 16

AMOUNTS INVESTEDIN CARBON FUNDS

2008-2012 50 mln euros

WIND FARM CAPACITY

2008 304 MW

2014 810 MW

HYDROELECTRICCAPACITY IN ITALY

2008 1.7 GW

2014 1.9 GW

PHOTOVOLTAICCAPACITY

2008 3 MWp

2014 25 MWp

RESEARCH ANDINNOVATION COSTS

2007 3.1 mln euros

2008 3.5 mln euros

RESEARCH ANDDEVELOPMENT STAFF

2008 24 employees

STAFF INVOLVED INDEVELOPING INNOVATIVEAND RENEWABLETECHNOLOGIES

2008 83 employees

(*) Edison + Edipower consolidated at 50%

CO2 EMISSIONS(*)

2007 30.9 mln tons

2008 27.4 mln tons

27

historical power plants, with investments estimated at about 380million euros. As a result, installed capacity will increase from thecurrent 1,700 MW to 1,800 MW by 2014. Activities involving other renewable sources included the start of aproject to overhaul the Castellavazzo solid biomass power plant.As part of this project, Edison and Confagricoltura (an organizationthat represents Italian farmers) signed a protocol of understandingconcerning the design and construction of biomass power plantsby sufficiently large and carefully selected agribusinesses.

Research and Innovation of theEnvironmentEdison’s contribution to fighting climate change also incudes acommitment to the development of innovative technologies.Specifically, the Group focused its research and developmentactivities on three main areas:� technologies for power generation from renewable sources

(solar, photovoltaic, wind, biomasses);� technologies for low-impact power generation to reduce

emissions;� efficiency and services related to energy efficiency and energy

conservation.Other projects in this area included research activities in cross-functional areas concerning advanced energy materials and thedevelopment of proprietary technologies.Experimental activities are carried out mainly at the Edison ResearchCenter in Trofarello and at the IENI Institute operated in Lecco by theCNR, with which Edison has a collaborative relationship.Lastly, the Group built a testing facility at the Altomonte powerplant where conventional and next-generation photovoltaicmodules and systems can be tested.The establishment of collaborative relationships with highlyprestigious organizations provides Edison with a privilegedposition in monitoring change in the technology scenario, which isan indispensable condition to identify the best solutions in theenvironmental field.Accordingly, Edison’s R&D Department has established over theyears a network of cooperation agreements with many of themain research centers in Italy and abroad. Lastly, Edison worksclosely with the EDF Research Center, sharing and developingtheir respective competencies.

Edison and Italy’s Nuclear ProgramEdison is currently carefully assessing the use of nuclear energyas a technology for the production of electric power thatgenerates no CO2 emissions and provides better diversification ofsupply sources than conventional technologies.Consequently, it has carried out detailed feasibility studies aboutthe use of advanced third-generation nuclear systems and isready to contribute to the development of nuclear projects in Italyonce the legislative and regulatory framework is decided.

Edison uses different approaches to pursue its commitment tofighting climate change: it chooses the best available

technologies for its facilities, invests in renewable sources, researchesand develops technologies with a low environmental impact andpromotes sustainable development in developing countries throughthe implementation of low emission technologies linked with theflexible mechanisms of the Kyoto Protocol.

Emissions Trading and CarbonManagementEdison was one of the first utilities in Italy to take concrete actiontoward the achievement of the Kyoto objectives, creating as early as2004 a team specialized in the development of emissions reductionprojects based on the so-called flexible mechanisms provided in theE.U. emissions trading regulations.CDM (Clean Development Mechanism) and JI (Joint Implementation)projects are chosen based on strict internal guidelines concerningtechnologies, target countries and prices. When choosingtechnologies, preference is always given to renewable sources(hydroelectric, wind power, solar, biomasses, etc.), projects toincrease energy efficiency in industries with production of electricpower and processes that involve switching to lower impact fuels.The first projects were undertaken in China and the Group iscurrently considering other areas in India, South America, Russia,the Ukraine and Southeast Asia to diversify and optimize itsportfolio of projects. Other opportunities are also being assessedin countries in the Mediterranean area, leveraging existingpartnerships in North Africa and the Balkans.Each chosen project undergoes a preliminary analysis based onenvironmental, social and sustainability criteria over both short-term and long-term horizons. Projects planned in proximity ofprotected areas or requiring population relocation are excluded.The full assessment process also looks at technical, legal andfinancial issues to evaluate the environmental and socialsustainability potential and risks entailed by each transaction.After completing this process, Edison may decide to purchase anyCER/ERU credits that a project is expected to generate,assuming responsibility for supporting the entire registration andcredit issuance process.

Development of Renewable SourcesEdison has always been active in the field of renewable sourcesbecause it is convinced that they can play an important role infighting climate change. An expanded use of renewable sourcesmakes it possible to diversify the energy mix and increase theenvironmental compatibility of production facilities. Edison plans to invest over 1 billion euros over the next five yearsto build new wind farms in Italy and abroad, develop new small-size hydroelectric power plants (mini-hydro) and installphotovoltaic systems, adding a total of about 900 MW ofgenerating capacity.As part of this effort, the Melissa/Strongoli wind farm, in theCalabria region, will be on operation early in 2009, bringing to354 MW the Group’s total wind power capacity in Italy. In addition,installation of a 3.3-MWpeak photovoltaic system at theAltomonte power plant is nearing completion. This facility is thefirst system in a plan that calls for the development of up to 25MW of photovoltaic capacity. In the hydroelectric area, workcontinued on repowering and upgrading Edison’s and Edipower’s

CDM: An international cooperation mechanism provided under the Kyoto protocolfor the development of greenhouse gas reduction projects in developing countriesthat generate credits (CER) that can be used in part by a company to achieve itsreduction objectives.

JI: An international cooperation mechanism provided under the Kyoto protocol forthe joint development of greenhouse gas reduction projects in countries withtransition-phase economies that generate credits (ERU) that can be used in part bya company to achieve its reduction objectives.

28

NUMBER OFEMPLOYEES HIRED

2007 1982008 324

FEMALE EMPLOYEES (%)

2007 15.6 %

2008 16.9 %

TOTAL NUMBER OFGROUP EMPLOYEES

2007 3,5732008 3,559

No. OF EMPLOYEESTRAINED DURING THE YEAR

2007 3,0252008 3,055

TRAINING HOURS PER CAPITA

2007 402008 41

AVG. PRODUCTIVITYBONUS PER CAPITA

2007 1,467 euros

2008 1,530 euros

TRAINING ANDDEVELOPMENT COSTS

2007 3 mln euros

2008 3 mln euros

EMPLOYEE ACCIDENTINJURY RATE

2007 3.902008 3.18

EMPLOYEE LOST DAYRATE

2007 0.162008 0.05

SOCIALRESPONSIBILITY

(*) Net of IWH

(*) Only teaching costs (*) Excluding injuries in transit (*) Excluding injuries in transit

29

OUR EMPLOYEES

Edison’s people, traditionally the engine that drives the Company’sgrowth, are a significant factor in the achievement of the Group’sobjectives by reliably delivering top level performance.Equal opportunity, awareness of employee needs and expectations,protection of employee health, a commitment to support professionaldevelopment and rewards for performance are the fundamentalprinciples on which Eidson’s relationship with its staff is based.Edison complies with all statutes governing labor contracts andpromotes its internal personnel management standards and theprinciples of the Group’s Code of Ethics to ensure that the rightsenshrined in the Universal Declaration of Human Rights and theprinciples of the Global Compact are protected in all of the countrieswhere it operates. Specifically, Edison does not tolerate any type of irregular work, off-the-books employment and, especially, child or forced labor.

Employee Recruitment MethodsEdison hires new employees both to acquire in the marketcompetencies and professional skills that are not available internallyand to recruit young people in whom it can invest to support theGroup’s growth and development. Recruitment and selectionactivities are used to fill line staff requirements and to hire recentcollege graduates, professionals and managers needed to fillpositions in growing businesses within the Group’s operations. An internal databank that interfaces in real time with the Edisonwebsite stores employment applications submitted to the Companyand makes them permanently available for open searches.Special attention is paid to college seniors and recent graduates, to whom Edison offers numerous internship and work opportunities to help them develop dissertations in various professional fields.These potential employees are recruited through numerousmeetings with students at top universities.

Employee DevelopmentEdison manages its staff leveraging the aspirations and professionalexpectations of individual employees to achieve its business andorganizational development objectives. Employee development isbased on a Management Model used to identify, guide anddevelop the management skills required of Company managers to achieve the Group’s objectives. Edison also developed aPerformance Assessment process that was applied to 873employees in 2008. This process, which targets executives, middlemanagers and college graduates, is designed to promote theachievement of business objectives and foster personal developmentin accordance with merit-based criteria, within an objective andtransparent interaction framework. Lastly, it recently finalized aproject to Define and Assess Competencies within professionalfamilies and role classifications with the objective of increasing keycompetencies for the development of the Group’s businesses.Edison also provides recent college graduates with a specialdevelopment, training and compensation path to support themduring the first three years they spend at the Company.

Compensation and Incentive SystemEdison compensates its employees based on merit-based criteria,related to the results of the management review process, whichprovides an integrated asessment of achievements,developmentpotential and professional skills, sistematically benchmarkedagainst market standards.The compensation system for all employees, with the exception of executives, includes collective incentives (result bonus) basedon the achievement of profitability and productivity targets and is designed to foster a more direct involvement of the staff in the pursuit of the Group’s objectives.In addition to a fixed amount, the compensation system for executivesand professionals includes a specially designed system of variableincentives based on the achievement of annual and multi-year targets.

30

CAREER ADVANCEMENT DURING THE YEAR

AGE OF EDISON’S STAFF IN 2008 EMPLOYEES HIRED IN 2008 BY STATUS

GROUP EMPLOYEE TURNOVER (*)

10%

8%

6%

4%

2%

02006 2007 2008

1.8%2.1%

2.8%

EMPLOYEES WHO UNDERWENT AN ANNUALPERFORMANCE ASSESSMENT

1,000

800

600

400

200

02006 2007 2008

857804

873

Disabled Other (e.g., orphans)

EMPLOYEES IN PROTECTED GROUPS

150

120

90

60

30

02006 2007 2008

35

85

35

87

34

2008 2007

86

0 20 40 60 80 100 120

Promotions frommiddle manager

to executive

712

Promotions fromoffice staff to

middle manager

4147

Promotions fromfactory to office staff

6652

Total promotions114

111

FEMALE EMPLOYEES (%)

2008 2007 0 4 8 12 16 20 24

Total staff 16.9%15.6%

Executives 9.9%9.5%

Middle managers 23.9%22.8%

Office staff 22.2%21.0%

Factory staff 0.7%0.8%

< 25 years old≥ 25 years and < 35 years old≥ 36 years and< 45 years old≥ 46 years and< 55 years old≥ 55 years old

21%

31%

2%

9%

37%

executivesmiddle managersoffice stafffactory staff

64%

17%

2%

17%

EMPLOYEE EDUCATION LEVEL IN 2008

Elementary schoolIntermediate schoolHigh school diplomaCollege degreeGraduate degree

14%

59%

1%

1%

25%

AVERAGE AGE44 YEARS OLD

324EMPLOYEES HIRED

(*) Voluntary resignations as a percentage of the staff at 12/31/08

31

For this group of employees, Edison has developed a three yearsprogramm called “Long Term Incentive”, based on the achievementof targets, which measure the Company’s profitability growth,benchmarked against top italian and European competitors.Since 2007, Edison has been holding its annual Edison GroupAward event to honor teams involved in special strategic Groupprojects. The 2008 awards went to power plants that performedparticularly well in the area of injury prevention, the team thathandled the construction of the Rovigo regasification terminal andthe operational management team of Edipower’s Euclid program.

Training and Empowerment of HumanResourcesBased on the findings of a structured process designed to determine the Group’s training needs, the PersonnelDepartment defines extensive training programs to address the dual needs of developing specific technical competencies and strengthening management competencies, which benefit the entire staff.A total of 145,848 training hours were provided in 2008, at a cost of 3 million euros.The main issues covered included team leadership management and motivation of employees. Other programs developed for specificprofessional families included trading activity training.In addition, extensive training was provided on the newOccupational Health and Safety Act, including a professionaldevelopment plan for Prevention and Protection Services Officers.

Lastly, 2008 marked the conclusion of the assessment phase ofthe “Edison Professional System” project, which defined the tradecompetencies of the main professional profiles within theCompany and the subsequent assessment of 800 employees.

Occupational Health and SafetyOccupational health and safety has always been a core concernfor Edison because of fundamental role it plays in protecting the integrity of all working people, including both employees andoutsiders who contribute to the Group’s activities. The adoption of health and safety systems that comply with internationalbenchmark standards (BS OHSAS 18001) demonstrates the Group’s commitment to going beyond merely maintainingcompliance with statutory requirements, choosing instead to promote a policy of prevention withe goal of fostering thedevelopment of a culture of safety at all levels of the organization.For this reason, Edison’s main focus in this area has been on theempowerment and involvement of its employees. Awarenessraising programs included the “Objective: Zero Risk” annualcontest, in which children of employees compete by submittingartistic works on safety issues, and the Safety Day event, whichis held to emphasize that the protection of the environment and of human health and safety requires a commitment that mustbe pursued every day.Occupational injuries situation, both for Company and contractoremployees, shows that, after a significant reduction in injury ratesachieved in earlier years, the Group’s performance has stabilized at

TRAINING COSTS PER CAPITA (*) (euros/year)

1,000

800

600

400

200

02006 2007 2008

870 867 868

PER CAPITA TRAINING HOURS

50

40

30

20

10

02006 2007 2008

3740 41

BREAKDOWN OF TRAINING BY TYPE IN 2008

Quality, safety and environmentTechnical trainingLanguages Information technologyInstitutional training/internal Specialized training/external Conventions

3,055EMPLOYEES

TRAINED

11%

6%

2%

10%

2%

35%

34%

Factory staff Office staff Middle managers

AVERAGE PER CAPITA PRODUCTIVITY BONUSES PAID

(*) Only teaching costs

2,000

1,600

1,200

800

400

02006 2007 2008

9981,183

1,3221,293

1,564

1,734

1,242

1,502

1,656

32

underpin the main relevant collective bargaining agreements.Early communication, consultation and debate and dialogbetween the parties are the essential tools to maintaining asystematic approach to union relations and, consequently, deploypositive solutions for the Company and its employees and avoidthe occurrence of personal and collective conflict.The most significant events of 2008 included the following:� signing of an agreement with the labor unions for the electrical

industry that regulates weekly work schedules and thecompensation portion of the Result Bonus for 2008 andrevises the reimbursement levels provided under theSupplemental Health Benefits Program;

� sale of 7 thermoelectric power plants to Cofathec Servizi S.p.A.and Seci Energia, resulting in the transfer of 93 employees tothe buyer companies;

� sale of hydroelectric facilities in the provinces of Trent andBolzano to Dolomiti Edison Energy S.r.l. and Hydros S.r.l.,respectively, resulting in the transfer of 64 employees to thesenewly established companies.

In recent years, the Company has been virtually free of collectivework stoppage events. Most strikes, which lacked significantsupport among Edison’s employees, were called at the industrylevel in pursuit of industry-wide objectives or, more in general, forpurposes related to national political issues.

excellence levels, compared to italian and International scenario.A reduction in the number of hours worked, rather than theincrease in the number of injuries (32 compared with 29 in2007), is the main reason why the injury rate for employees of contractors was up slightly. This indicator will be monitored in2009 to identify specific areas where action is required. However, an improvement in the lost day rate for contractors showsthat the injuries that occurred in 2008 had limited consequences. In 2008, the Group carried out a complete assessment of itscurrently organizational safety model and took action to complywith the new provisions concerning the risk evaluation andcontractor management process.The development of a new Interference Risk AssessmentDocument, applied to contractor companies that work at Edisonlocations, made it possible to improve the field coordinationprocess applied to these companies, while the adoption of a uniform and controlled process to identify safety costsenabled the Group to achieve full compliance with therequirements of the new Uniform Occupational Safety Code.

Industrial RelationsEdison shares with the labor unions a system of industrialrelations based on an ongoing constructive dialog, carried outwith the utmost respect for the fundamental principles that

Rate for Group employees Rate for employees of contractors

INJURY RATE (*)

10

8

6

4

2

02006 2007 2008

8.80

6.65 6.31

3.90

8.39

3.18

Rate for Group employees Rate for employees of contractors

LOST DAY RATE (*)

1,8

1,5

1,2

0,9

0,6

0,3

02006 2007 2008

1.66

0.10

0.27

0.16

0.22

0.05

Total hours missed per capita Hours missed for illness or accidents

HOURS OF WORK MISSED PER CAPITA

120

100

80

60

40

20

02006 2007 2008

56

89

55

99

51

94

Investments Operating costs

OCCUPATIONAL SAFETY COSTS AND INVESTMENTS (in thousands of euros)

14,000

12,000

10,000

8,000

6,000

4,000

2,000

02006 2007 2008

7,228

6,071

6,295

6,768

6,516

4,986

(*) Lost day rate = No. of days lost due to injury (excl. those in transit) x 1,000/hours worked

(*) Injury rate = No. of injuries (excluding those in transit) x 1,000,000/hours worked

33

Internal Communications AboutSustainability IssuesThe main event of 2008 was the launch of the “Ri-evoluzione”project, as an opportunity for reflection, discussion and dialog aboutissues that are important for the Company’s businesses, such asenergy conservation and sustainability. This internal communicationcampaign publicized models of daily conduct that can be followedboth at the office and at home to conserve energy.

The objective of this project is pursued with three actions: recycle,respect and conserve. In June 2008, all Edison employees receiveda “Ri-evoluzione” kit that specifically addressed water and energyconservation, followed, in July, by the launch of the “SustainabilityShots” photography contest for employees on energy conservationand sustainability. The 12 pictures that received the most votes onthe Intranet were used to illustrate the 2009 Edison Calendar, thetheme of which is sustainability and energy conservation.

The Edison + Company intranet portal was activated in 2008.This increasingly useful and interactive tool, which can be used toobtain work-related information and keep up to date on facts,events and projects concerning the Company, enables employeesto share data, documents, photographs and videos. The launch ofthe new portal was accompanied by the birth of the Edison +monthly newsletter, which reports on the main developments inthe Edison world. Lastly, MondoEdison, the magazine distributedto all employees that provides more detailed presentations ofissues concerning the Company, was revamped and specialissues were published, including one on the Beijing Olympics andEdison’s partnership with the Italian Olympic Committee.In order to foster and strengthen employee cohesion, the Companyprovided several regular meeting opportunities and organizedcorporate, sports and team-building events, which included:Working Parents Day, which enabled the children of employees tosee for one day their mothers and fathers at work; the SummerFeast, which marked the conclusion of the Eleventh CompanyTournament of Arena Soccer; and the Managers and ExecutivesConvention, which was held concurrently with the unveiling of theEdisonCasa sales package for the residential market.The closing event of 2008 was the annual Christmas Party for theMilan metropolitan area, which featured entertainment and music andsaw the debut of the Edison Band, a new team-building idea basedon the notion that music is an agent of change and that it is theemployees who are the true protagonists of change. The Christmasparty also provided a venue for the Edison Group Award 2008.Lastly, the first phase of the Enlightened Conservation project,which started in 2007 at the initiative of a group of employees inconnection with the Sustainable Development Trophy, wascompleted in 2009, resulting in the installation of about 400 squaremeters of photovoltaic panels on the rooftop terrace of theCompany’s historic Foro Buonaparte headquarters in Milan. Thissystem will generate about 30 MWh of power a year, avoiding theemission of about 18 tons of CO2. This project will be graduallyextended to all Edison field offices and power plants in Italy.

LISTENING TO THE NEEDS OFEMPLOYEES AND BALANCING WORK AND PRIVATE LIFE:EDISON PER TEIn April 2008, the Company launched Edison per te, a programdesigned to help employees reconcile their personal needs withtheir professional obligations by providing services and activitiesthat covered four support areas: Health and Wellness, Family,Personal Time, and Savings Opportunities.This program is the result of an analysis and survey process thatincluded the following phases:� analysis of the practices in use at Edison and

benchmarking with companies in the energy sector andother industries in Italy and internationally;

� survey of employee needs and expectations;� development of activities and services for activation in

areas identified as requiring support.

The Health and Wellness area includes medical preventionservices, which in 2008 were provided in cooperation with theItalian League for the Fight Against Tumors; online medical con-sultations; information about medical facilities and hospitals;and wellness programs designed to promote physical activity.The Family area includes pediatric assistance services, summercamps, online information technology and foreign languagecourses for the children of employees, information about facilitiesand services for children and teenagers, and babysitting con-tacts and reservations.The Personal Time area offers to employees in the Milan areasupport by specialized personnel in dealing with the public ad-ministration and to employees at all locations online support forprivate and personal legal and tax issues.Starting 2009, the programs previously handled by the Edi-son Recreational Association will be gradually shifted to Edi-son per te and new initiatives will be added in the SavingsOpportunities (conventions and discounts) and LeisureTime areas. In addition, the programs promoted by the EdisonSeniors Group will be strengthened and new leisure time ac-tivities added, which will also be open to former employeeswho are members of the Recreational Association.A satisfaction survey of this program, which is open to all em-ployees, including part-time and temporary staff, showed that96% of the people surveyed were aware of the program and85% of them found it useful. In January 2009, Edison per tewas awarded the FamilyWork Prize, promoted by the Re-gion of Lombardy and ALTIS, having placed first in the “BestProgram of Integrated Employee Services” category.

34

OUR CUSTOMERS

A significant event that characterized 2008 was Edison’ entry inthe residential market. The Group targeted the home user marketwith a direct sales program, choosing to transfer to consumersthe value of its production, generated from high efficiency powerplants and renewable source facilities. As part of this effort,Edison is committed to delivering to its customers high qualityservices through innovative and competitive sales packages,tailored to the consumption profiles and needs of each consumer.

Services for Intelligent EnergyConsumptionEnergy efficiency and the rational use of energy sources areimportant issues not only in terms of seizing opportunities toreduce energy costs, but also with regard to increasing ourindustry’s environmental sustainability. One of Edison’s goals is tohelp its customers use energy carefully and rationally. For thispurpose, it has developed a portfolio of services capable ofmeeting the needs of different types of customers, based on thecharacteristics of their equipment, their production processes andconsumption levels, and the requirements of the buildings wherethey are located. The Energy Check service can be used to pinpoint areas whereconsumption of electric power, heat and water can be reduced,both at production facilities and in residential and office buildings.Services that help boost energy efficiency include Rephasing,Power Quality, Cogeneration and Maintenance of TransformerStations and Natural Gas Substations. In addition, Edison offersto customers in the Business Segment the construction ofphotovoltaic systems on a turnkey basis, which it provides throughagreements it has executed with top technical partners.

A Sustainable Product LineIn 2008, Edison activated a new sales channel for Eco3businessand Eco3family, two products through which it offers RECS(Renewable Energy Certificate System) certified renewableenergy. Both sales packages are now distributed by the Metrosales outlets, providing Edison with a direct contact with themarket of small and medium-size businesses. Thanks to theEco3business currently in effect, “green energy” is beingdelivered to more than 18,000 manufacturing locations. Inaddition, the partnership established with Lifegate in 2008enabled the Company to launch two new products based on thesupply of renewable energy in combination with a program tooffset the effects of power plant construction and contractmanagement activities by supporting reforestation programs inItaly and abroad. The two sales packages that carry the EdisonLifegate name are ZeroEpeople and ZeroEplanet.

Customer Satisfaction and Service QualityEdison operates a Customer Relationship Management (CRM)system that uses a broad array of channels to communicate withcustomers. This system was activated in January 2007 for electricpower customers in the Microbusiness Segment and has sincebeen expanded to handle sales campaigns and aftersale activitiesfor electric power customers in the Residential Segment.A total of 189,000 service requests were opened and handledthrough the CRM system, including 152,000 service requeststhat were resolved directly by the Contact Center with a one-call

ENERGY SOLD THROUGH “GREEN” PRODUCTS(RECS CERTIFIED) (in GWh)

200

160

120

80

40

02006 2007 2008

17.9 16

176

USES OF NATURAL GAS (in thousands of m3)

1,600

1,200

800

400

02006 2007 2008

Other salesSales of foreignproduction ThermoelectricusersIndustrial usersResidential users

501356

8,312

1,164

3,306

673254

9,154

1,098

2,638

894311

8,669

1,336

2,598

USES OF ELECTRIC POWER (in GWh)

80,000

60,000

40,000

20,000

02006 2007 2008

ExportsDeregulatedmarketIndustrial andcaptive customersand other usesCIP 6/92dedicated

63

40,425

4,948

19,964

132

41,225

4,324

18,092

269

49,575

4,47213,137

GAS CUSTOMERS SERVED AND SALES VOLUMES

200

160

120

80

40

02006 2007 2008

5.0

4.0

3.0

2.0

1.0

0.0

168172 170

4.53.8 3.9

ELECTRIC POWER CUSTOMERSSERVED AND SALES VOLUMES

60

50

40

30

20

10

02006 2007 2008

4035302520151050

Thou

sand

s of

cus

tom

ers

Gross TW

h

Thou

sand

s of

cus

tom

ers

Millions of m

3

9

16

5035

2420

Total electric power customers Sales volumes

Total gas customers Sales volumes

35

solution. The remaining 37,000 service requests were resolvedeither by Contact Center personnel or by Edison’s CustomerService Department within an average of less than seven days. Calls to the Contact Center were fielded with a level of service of84.2% (calls answered within 30 seconds) in the Small BusinessSegement and a level of service of 80.1% in the ResidentialSegment.In 2008, Edison received about 4,500 requests of sales serviceinformation and complaints from electric power customers and900 from natural gas customers and, in 96% of the cases, itsucceeded in meeting the objective of resolving the issue in lessthan 20 business days, as required by the Energy Authority.Also in 2008, Edison Energia was awarded ISO 9001:2000quality certification for its operations that market electric power,natural gas and services.Edison Energia’s quality management system provides greater

control over the process of delivering products and services bymonitoring on an ongoing basis the activities in this area throughthe use of detailed monthly reports.The process used by Edison to prepare sales and advertisingmaterial is compliant with the regulations that govern themanagement of personal information. As of December 31, 2008,the Company had received no complaints and had not been thetarget of an investigation with regard to these issues.Lastly, the Electric Power and Natural Gas Authority (AEEG) finedEdison Energia for the incorrect application of the M coefficient(as set forth in Resolution No. 237/00, Section 17.1) to three finalcustomers out of a total of about 167,600 customers. EdisonEnergia refunded to the three customers the modest amountsthat they had been improperly asked to pay and was required topay the minimum statutory administrative fine of 25,822.84 euros,pursuant to Law No. 481/95.

EDISONCASA AND THE AMICABLE RESOLUTION SYSTEM: BOTHCREATED BY LISTENING TO AND DIALOGING WITH CONSUMERS

From the moment the electric power market was deregulat-ed in July 2007, Edison began a long process of listening toItalian consumers and analyzing their needs. The Companyran a series of focus groups to test different options con-cerning products, pricing and advertising media.This effort resulted in the development and launch, in Sep-tember 2008, of EdisonCasa: an electric power sales pack-age for the residential market that includes a 20% discount onthe cost of energy (equal, on average, to 65% of the entire bill). This formula is a strong indication of Edison’s commitment tohelp families in their daily struggle with rising prices, whileproviding concrete support for the deregulation of the elec-tric power market.Concurrently with its entry into the residential market, Edison,working with the support of the Italian Association of Electric

Power Companies and the AEEG, began to carry out some ac-tivities in cooperation with Italy’s main consumer groups.One such activity was an information campaign on the dereg-ulation of the electric power market and the opportunitiesthat this created for residential users.

In addition, thanks to an agreement between Edison and 11consumer groups, the amicable resolution system was acti-vated on an experimental basis in 2009. This system can beused to resolve disputes between the Company and its cus-tomers amicably, voluntarily and free of charge.Lastly, Edison is discussing with the AEEG options that couldbe applied to simplify the current regulations governing in-voicing issues, in order to produce customer bills that areclearer and more readily understandable by end customers.

36

OUR SUPPLIERS

Edison is aware of the role played by its suppliers in ensuring andincreasing the Group’s overall competitiveness. Accordingly, it definedin its Code of Ethics the basic principles for building and maintainingstable and quality relationships with its commercial partners.Cooperation, transparency , lack of discrimination and compliancewith contract terms are the fundamental principles adopted by theGroup to deal fairly with its suppliers.When purchasing products and services Edison follows a policybased on maximum transparency, impartiality and opencompetition, dealing with suppliers who, in addition to meeting theCompany’s needs, are also able and willing to apply the bestorganizational and work methods in the areas of safety,protection, workplace hygiene and ethics. Edison’s procurement procedures guarantee compliance with

social and environmental requirements and include controlsystems and the use of corrective actions.Accordingly, the supplier qualification process (before ordering)and the assessment of their performance (after delivery) ensurethat suppliers meet the requirements of technical, commercial andfinancial reliability and ethics needed to enable the Company toachieve its growth and development objectives.Lastly, Edison promotes relationships with local businesses in theareas where its facilities are located to foster their economicdevelopment and consolidate its relationship with the community.

Qualification and Selection SystemsEach supplier of goods or services can ask spontaneously to bequalified on Edison’s or Edipower’s Web portal, applying for therelevant merchandise and service categories. Depending on thestrategic significance of each category, the process follows the pathrequired for inclusion in the Vendor List or the Supplier Register. Inthe case of the latter, after an initial prequalification phase, theSupplier Qualification Team (SQT) decides whether a companyshould be asked to proceed with the actual qualification process. The SQT has expertise in multiple areas and, depending on themerchandise categories involved, may use specialists to provideopinions on technical, conduct, economic and financial issues.

Qualification for inclusion in the Supplier Register is valid for threeyears. Active suppliers undergo performance reviews and negativefindings can require the adoption of improvement actions or causechanges in the qualification status.When selecting suppliers who work at Edison locations, inaddition to assessing their technical and financial capabilites andreputation, special attention is paid to occupational safety issuesand the corresponding preventive measures and to compliancewith employee compensation and benefit standards.In 2008, 85% of the value of Edison’s purchases was provided bysuppliers who underwent the qualification process. In the case ofEdipower, 91% of the orders for major merchandise categories wasissued to qualified suppliers. In the case of repetitive purchases ofnon-strategic items, Edison has been steadily increasing the use offramework agreements, encouraging the placement of orders bymeans of online catalogs via dedicated software accessed through theB2B system instead of managing orders through the SAP/R3 system.The Edison Group has neither been a plaintiff nor a defendant inlegal disputes with a supplier since 2006.

VALUE OF PURCHASES FROMQUALIFIED SUPPLIERS (in millions of euros) (*)

1,000

800

600

400

200

02006 2007 2008

(*) These amounts do not include the data for Edipower.

553634

829

GEOGRAPHIC BREAKDOWN OF PURCHASESOF GOODS AND SERVICES – 2008 (*)

VALUE OF PURCHASES OF GOODS AND SERVICES (in millions of euros) (*)

1,000

800

600

400

200

02006 2007 2008

650

746

975

Italy

Other countries

10.3%89.7%

(*) These amounts include the data for Edipower.

(*) These amounts include the data for Edipower.

37

PUBLIC INSTITUTIONS

The Group’s Code of Ethics states that “Edison engages inrelationships with political organizations only for the purpose ofgaining insight into issues that are relevant to the Group and oftransparently promoting the positions it supports. The Group neitherfinances nor supports political parties or their representatives andtakes a strictly neutral stance toward contending political groupsduring election campaigns or events involving political parties.”Edison interacts on an ongoing basis with the publicadministration to monitor and manage the process of securingauthorizations, permits, concessions and public grants andfinancing. Relationships with public officials are carried out in fullcompliance with the requirements of the Organizational Modeladopted pursuant to Legislative Decree No. 231/01. Edison maintains an ongoing dialog with the Italian governmentand Parliament, regulatory agencies, E.U. institutions, localgovernments and trade associations, actively collaborating withthese entities and making available to them the Company’sknowhow in specific areas. The Institutional and RegulatoryAffairs Department monitors daily developments in Parliament,providing support during the bill drafting process anddeveloping “corporate position papers” that best represent the

interests of the Group.At the E.U. level, Edison follows the proceedings of the Council ofEurope and the European Parliament. Consistent with itscommitments in this area, the Group was the first Italian business tojoin the Lobbying Transparency Register established by the EuropeanCommission. Edison’s inclusion in the Register, which is notmandatory, ensures that Commission officials are being provided withtransparent communications about the Group’s activities in Brusselsand will constitute a hallmark of the credibility and knowledge of itscorporate and professional spokespersons.Inclusion in the Register requires a commitment to comply withthe Commission’s Code of Conduct governing relationships withE.U. officials when engaging in direct lobbying within E.U.insititutions and, at the same time, to agree to respect therequirements set forth in the Parliament’s Code of Conduct forpermanent access to the Parliament’s facilities. Because of itsinclusion in the Register, Edison will be automatically contacted aspart of any public consultation carried out by the Commission.Lastly, Edison is actively involved with industry associations(Confindustria, Assoelettrica, Assomineraria, Federestrattiva,Eurelectric, Unice, etc.) and associations that support broad-based interests (environmental associations, trade associations,consumer associations, etc.)

In September 2008, ten years from the project’s beginning,the Adriatic LNG terminal, the first of its kind in the world,was positioned offshore the Veneto coast and is expectedto go on stream during the first half of 2009.The success of this project is the result of an intenseactivity that included an ongoing dialog with local,national and E.U. institutions focused on identifying thebest possible solutions for the construction of aninfrastructure of strategic importance for Italy’smodernization and development.The Italian energy and antitrust authorities have definedthis project as a development of fundamental importance

ROVIGO: EUROPE’S FIRST OFFSHORE REGASIFICATION TERMINAL IS ANEXAMPLE OF SUCCESSFUL COLLABORATION WITH PUBLIC INSTITUTIONS

to improve the competitiveness of Italy’s natural gasmarket.Currently, Italy imports natural gas through four pipelines,each of which is physically tied to one of the producingareas (Russia, Algeria, Libya and Northern Europe). On theother hand, the supply of liquefied natural gas (LNG)provides greater procurement flexibility and access todistant markets where competitively priced products maybe available.Produce more energy but reduce emissions. Natural gas, avaluable and “clean” energy source, is by far the bestsolution to meet both of these requirements.

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A significant example of Edison’s success in involving allstakeholders in the decision-making process is the IGI projectfor the construction of a pipeline across the Strait of Otrantothat will link Italy with Greece and allow importantion of naturalgas from the Middle East.The local communities in the region of Apulia that are affectedby the arrival of the gas pipeline have been involved to a verysignificant extent in the development of this project through aprocess of contact and dialog that spans five years.Edison’s contact with local authorities began in 2004, whenthe project was unveiled at an event attended by the nationalrepresentatives of Legambiente, a major environmentalassociation. A number of events that included meetings withlocal environmental associations, local institutions and thelocal population were held during the ensuing four years until,in 2008, the local City Council approved an agreementestablishing Edison’s obligations toward the local community.Subsequently, additional initiatives were planned to involvelocal communities and increase their awareness of key issues,including a project for the local schools designed to makestudents more aware of the importance of energyconservation and sustainability issues.

IGI, AN EXAMPLE OF TRANSPARENTAND CONSTRUCTIVE DIALOG WITHTHE LOCAL COMMUNITIES

OUR COMMUNITIES

The building of a new facility, the construction of a gas pipeline orthe development of a major infrastructure constitute activities thathave a major impact on the territory and local communities.Edison’s responsibility is to develop its projects identifying sharedsolutions through a dialog with local communities and transparentcommunications. During the past 10 years, Edison completed aninvestment plan in the electric power area that is unmatched inEurope, adding about 7,000 MW of new generating capacity.The process that made such an achievement possible requires aunflagging commitment by the people involved over periods oftime that could last several years and an effort to achieve a broadinvolvement of the local communities.

The key elements that characterize Edison’s interaction with thelocal communities include: � Presence – Constant contact at the local level to listen,

understand and meet the needs and expectations of the localcommunity;

� Trustworthiness and Reliability – Willingness to be heldresponsible for the consequences of one’s actions;

� Communication – Establishment of a team at the local levelcapable of providing clear, complete and transparentinformation.

The use of discussion forums, an ongoing dialog with the oppositionand a lasting relationship with the local authorities are the tools used inthis process, within which Edison has been playing a leading role in

Komotini

ITALYOtranto

AthensGREECE

LarisaVolos

SaloniccoKavala

Stravolimenas

Nea Messimvria

OffshoreEDISON 50%DEPA 50%

OffshoreDEPA 100%

IGI OffshoreIGI OnshoreITGNational network

IGI

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Italy in terms of its willingness to listen to and dialog with localcommunities for the shared development of new projects.The success of this process can be measured with the followingquality indicators:� the project’s actual implementation; � the development of economic initiatives tied to the project’s

implementation;� widespread support among political groups and the population;� a strong relationship with local players based on trust and

ongoing collaboration;� administrative continuity at the local level as evidence of a

constructive approach to managing local relationships.

The work done by Edison alongside local institutions enabled theCandela (Fg) municipal administration to win the Pimby (Please InMy Backyard) award “for having contributed to showinfrastructure and local development can be reconciled whenthere is a willingness to involve local players in a shareddevelopment project.”

A Commitment to Education, Culture and SportsEdison views partnerships with entities, nonprofit associationsand institutions an integral part of its corporate responsibilitystrategy because they represent effective tools to dialog with civilsociety and its stakeholders. The Company has chosen to focusits efforts on a few priority issues: first of all, culture and theenvironment, particularly in the areas where it operates, but alsosports, both locally and at the national level. The methods it usesto pursue these objectives always include targeted investments tosupport specific projects and the community achieved throughcollaboration with public institutions.

Edison is keenly aware of the needs of the younger generations,which it addresses with projects involving environmental andsocial education, energy conservation and children supportservices. Programs in these areas included: � “Happy at School,” a collaborative project with Sodalitas

promoted for the second year in the Milan school system onthe issue of “bullying” that in 2008 trained 95 teachers at 38

schools on how to prevent youth violence;� “Soft Rugby,” a project offered in partnership with ASRugby

through which 600 children with symptoms of physicaldisabilities were enrolled in a sports program that helped themachieve better integration;

� “L’Ovale al Beccaria,” also a project in partnership withASRugby, offered to young men held at Milan’s Beccariajuvenile detention center, giving them an opportunity toparticipate in sports activities and welcoming them at ASRugbyat the end of their detention;

� “Edipower per la scuola,” a project on energy andsustainability for elementary, intermediate and high schoolstudents in the areas where Edipower’s facilities are located.

Edison has been collaborating with Legambiente for over 10years on programs about environmental education and energyconservation. In addition to promoting a culture of energyconservation, the 2008 edition of the “Kyoto anch’io – Lascuola amica del clima” contest encourages the implementationof programs to reduce energy consumption at the schoolsenrolled in the contest. The school with the best environmentaland energy building requalification project won a photovoltaicsystem as a prize. Activities carried out in connection with thecontest included Italy’s first survey of the energy efficiency ofschool buildings, which covered 2,035 schools. The data collectedcovered such issues as the energy usage of buildings, fromlighting to heating, and including waste management and security.

In the area of culture, Edison supports directly or throughsponsorships the implementation of culturally significant initiativesand activities. One such project is the ongoing design work totransform the decommissioned Emilia Power Plant in Piacenzainto a museum center that will host art exhibits on an ongoingbasis. Art shows that Edison supported in 2008 included Canovaat the Tsar’s Court at Milan’s Palazzo Reale and From Titian toPietro di Cortona: Myth, Poetry and the Sacred at Museum ofCycladic Art in Athens. Other initiatives included a project for thepreservation of collective memory that involved digitizing over4,200 images from Edison’s photography and film archives(www.lombardiabeniculturali.it). Lastly, Edison honored the

In 2008, Edison launched Edison – Change The Music, aproject that used three initiatives — Community, GreenMusic Book and Contest — to cover all areas of the musicbusiness, from event organization and promotion torecording studios, logistics and transportation at eventlocations, and waste management. The project’s objective,which enjoyed the support of major artists, recordcompanies, event organizers, music promoters and themedia, was to obtain concrete and measurable results interms of energy conservation and environmental impactreduction through music and all related activities.Over 300 bands from all over Italy competed in theContest’s part of the project. The 12 semifinalistsperformed at three cities that are home to facilities of theEdison Group: Otranto, Piacenza and Milan. The greatest

EDISON – CHANGE THE MUSIC: THE FIRST MUSICALPROJECT WITH A LOW ENVIRONMENTAL IMPACT

possible number of activitiesand technical solutions thatfavored energy conservationand respect for theenvironment were adoptedduring these concerts.On MySpace, the Communitywelcomed anyone whosubscribed to the project’sprinciples and wanted adviceand information on energyconservation in music.The Green Music Book is an evolving guide on energyconservation and emissions reduction in music developedby members (406 entries) of the Community.

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filmmaker and former employee Ermanno Olmi with thepublication of a DVD entitled Ermanno Olmi. The Edison Yearson the occasion of his selection as the winner of the Golden LionLifetime Achievement Award at the 65th Venice Film Festival.

Edison supports sports because it fully shares the values ofintegrity, team spirit and respect. In addition, support for amateur,youth or “minor league” programs, which always have a significantlocal following, have traditionally been one of the tools with whichEdison interacts with local communities. In 2008, the Groupsupported sports initiatives both locally and at the national level.Edison is the official partner of the Italian Volleyball Federationand its Men’s and Women’s National Teams and of the ItalianRugby Team. In addition, under an agreement with the ItalianNational Olympic Committee, it is sponsoring all Italian Olympicathletes from 2008 to 2010. As the main sponsor of the ItalianOlympic Team at the Beijing Olympics, Edison organized at CasaItalia a series of informational events on environmentalsustainability and energy conservation. In addition, its Row for aMinute Like a Champion project and the It’s a Whole New

Energy contest raised 65,000 euros for the Telethon. Lastly,Edison was the main sponsor of the 2008 Italian Track and FieldChampionships.Edison is also involved in the social services area with the Siticiboand Missione Sogni projects and the support it provides to AMREF.Siticibo is a project in which a large number of employees at theForo Buonaparte headquarters volunteer during business hours tocollect surplus food from the Edison cafeteria for donation to soupkitchens in Milan. Missione Sogni is a charitable organizationsupported by Edison that, working with the utmost confidentialityand the approval of a scientific board, helps children between 5 and18 years old suffering from serious chronic diseases or disabilitiesrealize their dreams. Lastly, Edison helps AMREF build water wells inKenya (4 in 2008) and educate the local tribes about theimportance of a sustainable and shared use of water resources.In 2008, Edison was again present at the fourth edition of Daldire al fare, the corporate social responsibility show thatprovides it with an opportunity to interact with its stakeholders.In 2008, Edison distributed a total of 2,820,000 euros insponsorships and 442,000 euros in charitable contributions.

The Foundation carries out scientific research projects andstudies of the economic, cultural and social issues concerninglocal manufacturing systems and industrial clusters, focusing onrelationships between small/medium-size businesses and largeenterprises and between communities and local development, aswell as of issues relating to the infrastructure and services offeredby a civil society, particularly in light of the globalization process.The foundation also promotes studies, surveys, publications andevents both on its own and in cooperation with research entitiesand institutes, other foundations, associations, businesses andindividuals, and by sponsoring projects that are consistent withthe purposes stated in its Bylaws. Recent important initiatives and

THE EDISON FOUNDATIONpublications in which the Foundation was involved included thepromotion of a convention entitled “Foreign Investments andInternational Trade. The Geo-economics of Development," whichwas held in Rome in March 2008, and preparation together withAccademia dei Lincei for a symposium entitled "Environmentaland Energy Innovation in Economic Dynamics," which isscheduled for May 2009. Publications included a new volume inthe Foundation’s institutional series entitled “Local Banks,Industrial Clusters and Small and Medium-size Businesses,” abook entitled “The EU and the Economies of the EasternEuropean Enlargement,” and several other studies and researchworks, and a newsletter about the Foundation’s activities.

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The 2008 Sustainability Report was prepared in accordance withthe Sustainability Reporting Guidelines developed by the GlobalReporting Initiative (GRI) in 2006 (G-3), integrated with theElectric Utilities Sector Supplement, 2007 Pilot version. Thisstandard is internationally recognized as the best practice insustainability reporting.Edison chose to follow a gradual approach in adopting the GRIGuidelines and plans to add to the Report new indicators ofsocial and environmental performance each year. In 2008, theGroup applied the B+ level of the Guidelines.Edison views its Sustainability Report as a tool to communicatehow the Group manages its corporate responsibility andprovide a complete and balanced presentation of its values,strategies and performance during the reporting period. TheReport is also a management tool that can be used to monitorthe Group’s sustainability performance and set improvementgoals for the future.

Edison was one of the first companies in Italy to prepare anenvironmental report. Since 1994, the year when it published thefirst document of this kind, it has been steadily expanding thescope of the report, moving from a strictly environmental focus tothe coverage of health and safety issues and, starting with thefirst Sustainability Report in 2004, all areas of CorporateResponsibility.

The Sustainability Report is published each year and is distributedat the Shareholders’ Meeting.

The consolidation method adopted requires the following:� the operating and financial data and the data for the main

performance indicators (electric power and hydrocarbonproduction, installed generating capacity) shown in the Reportmust be consistent with the consolidated data of the EdisonGroup, computed in accordance with the IAS/IFRS International

Accounting Principles, and must include Edipower at 50%;� the social and environmental data must be those of Edison’s

core businesses (electric power operations and hydrocarbonsand natural gas operations), with Edipower consolidated at100%, consistent with the previous year. Edison isEdipower’s majority shareholder and chooses to fully includein its report the data of Edipower’s environmental and socialperformance.

The scope of the environmental data includes all of the industrialfacilities of the electric power and hydrocarbon operations, butonly the Bolzano, Sambuceto and Trofarello complexes insofar asoffices are concerned. In addition, the following disclosures arebeing provided in the 2008 edition of the Report:� the 2008 environmental data for the seven thermoelectric

power plants sold to Cofathec Servizi S.p.A. and Seci Energiaare limited to the period from January 1 to March 31;

� the 2008 environmental data for the hydroelectric powerplants sold to Dolomiti Edison Energy S.r.l. and Hydros S.r.l. arefor the entire year.

Any additional reductions in scope are disclosed within thedocument and discussed in special notes.

In 2008, the data collection process was systematized, particularlywith regard to social data, which made it possible to improve thequality of the final qualitative and quantitative information provided inthis document.

As was the case in previous years, the 2008 Sustainability Reportwas audited by Independent Auditors to certify its compliancewith the Guidelines defined by the GRI - Global ReportingInitiative. This process was completed successfully with theissuance of a certification of compliance, which has beenannexed to this Report (page 42).

A NOTE ON METHODOLOGY

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Published byEdison SpaExternal Relations and Communications DepartmentForo Buonaparte, 3120121 MilanTel. +39 02 [email protected]

A thank you to all Edison Departments and colleagueswho collaborated in the writing of this Report

In cooperation withKPMG Global Sustainability Services

Art DirectionIn Pagina, Saronno

PhotographsEdison ArchivesFotoliaiStockphoto

Printed byGrafiche Larovere, Milan

Milan, May 2009

This publication was printed on ecological paper, with a low impact on the environment.

GRI INDEX

Page Global Compact

1 Strategy and Analysis

1.1 Statement from the Chairman and the Chief Executive Officer 5

1.2 Key impacts, risks, and opportunities 13-17, 22-24, 27

2 Organizational Profile

2.1 Name of the organization 7

2.2 Primary brands, products, and/or services 7

2.3 Operational structure 8

2.4 Location of the organization's headquarters ibc

2.5 Countries where the organization operates 3

2.6 Nature of ownership and legal form 20

2.7 Markets served 34

2.8 Scale of reporting organization 2-3, 6, 18, 28

2.9 Significant changes 41

2.10 Awards received 33

3 Report Parameters

3.1 Reporting period 41

3.2 Date of publication of previous report 41

3.3 Reporting cycle 41

3.4 Contacts and addresses for report information ibc

3.5 Process for defining report content 15

3.6 Scope of the report 41

3.7 Limitations on the objective or scope of the report 41

3.8 Information about affiliated companies 41

3.9 Data measurement techniques and bases of calculations 41

3.10 Restatements compared with previous report 41

3.11 Significant changes from previous report 41

3.12 Reference table 46

3.13 Independent certification 42

4 Governance, Commitments, Engagement

4.1 Governance structure 12

4.2 Indicate whether the Chairman isalso an executive officer 12

4.3 Independent and non-executive Directors 12

4.4 Mechanisms for shareholders toprovide recommendations 20, CG p. 279

4.5 Linkage between compensation for Directorsand top management and performance CG p.263, 265-266

4.6 Conflicts of interest CG p. 272-273

4.7 Qualifications of Directors CG p.262-263

4.8 Mission, values, codes of conduct, and principles 11, CE

4.9 Procedures to identify and manage economic,environmental and social performance 13-15

4.10 Process for evaluating the Board’s performance CG p.261

4.11 Method for applying the precautionary principle or approach 13, 27

4.12 Adoption of external economic, social andenvironmental codes and principles 11,12

4.13 Memberships in industry associations 37

4.14 List of stakeholdes engaged by the organization 16

4.15 Basis for identificationof stakeholders with whom to engage 16

4.16 Approaches to stakeholder engagement 16-17

4.17 Key topics and concerns raised through stakeholder engagement and actions taken 16-17

ECONOMIC PERFORMANCE

DMA EC Disclosure on Management Approach 19-20, CFN, Site, RO p.4-21

EC1 Direct economic value generated and distributed 19

EC6 Policy, practices, and proportion ofspending on locally-based suppliers 36

Page Global Compact

ENVIRONMENTAL PERFORMANCE

DMA EN Disclosure on Management Appproach 13, 22-24, 27 8°

EN1 Raw materials used 21, 23

EN3 Direct energy consumption by source 21, 23 9°

EN5 Energy saved 22

EN6 Energy-efficient or renewable-energy-based products and services

EN7 Initiatives to reduce indirect energy consumption and reductions achieved 33 9°

EN8 Water consumption by source 21, 23

EN12 Description of significant impacts on biodiversity 22

EN13 Habitats protected or restored 23, 24

EN16 Greenhouse gas emissions 21, 24-25

EN18 Initiatives to reduce greenhouse gas emissions 22, 25, 27 7°, 9°

EN20 Other air emission 25

EN21 Water discharge 23

EN22 Waste production and disposal methods 23-24

EN23 Total number and volume of polluting spills 23

EN26 Initiatives to mitigate environmental impacts of products and services 34 7°, 9°

EN28 Fines for non-compliance withenvironmental laws and regulations CFN, p.126-133

EN30 Environmental protection expenditures and investments 24-25 7°, 9°

SOCIAL PERFORMANCE

DMA LA Disclosure on Management Appproach 29-31

LA1 Breakdown of workforce by employment type,employment contract, and region 30

LA2 Turnover by age group, gender, and region 30

LA4 Collective Bargaining Coverage 32, CBA applied to100% of contracts 3°

LA5 Minimum notice periodfor operational changes 32, required by CBA 3°

LA7 Injuries and occupational diseases 32 1°

LA8 Training programs concerning prevention and risk control to assist employees regardingserious conditions or diseases 31-32

LA10 Employee training 31

LA12 Percentage of employees receiving performanceand career development reviews 30

LA13 Breakdown of employees by gender andother indicators of diversity (e.g., disability) 12, 30 1°

HUMAN RIGHTS

DMA HR Disclosure on Management Appproach 29, 36

HR1 Transactions that have undergone human rights screening 11, 36, CE 2°,4°,5°,6°

IMPACTS ON SOCIETY

DMA SO Disclosure on Management Appproach 37-39

SO1 Management of impacts on communities 16-17, 38-39

SO2 Monitoring of the risk of corruption 13 10°

SO3 Employees trained in preventingcorruption crimes 13

SO5 Positions on public policy and lobbying 37 2°

PRODUCT RESPONSIBILITY

DMA PR Disclosure on Management Appproach 34-35

PR5 Customer satisfaction 34-35

PR8 Complaints regarding breaches of privacy 35

PR9 Fines for non-compliance with laws and regulations 35

LegendCFN: Consolidated Financial Statements – CG: Corporate Governance Report – Site: Edison’s website – CE: Code of Ethics – RO: Report on Operations – ibc: inside back cover –CBA: Collective Bargaining Agreement

EDISON SpaForo Buonaparte 3120121 MilanT 02 6222.1www.edison.it

Documents

Sustainability report 2008 - Edison Spa